Very odd error now when trying to start web site.

I created a site that I have been working on for months now and all the sudden when I start the site in VS 2010 I am getting the following error.
Error 1 It is an error to use a section registered as allowDefinition='MachineToApplication' beyond application level.  This error can be caused by a virtual directory not being configured as an application in IIS. C:\inetpub\wwwroot\LHSystemHealth\obj\Debug\Package\PackageTmp\Web.config 46
When I go to that line in the web.config it is this line.
<authentication mode="Windows" />
Nothing was change in either the site or IIS. I cannot figure out what the hell happened. I even created a new website project and then added the missing lines needed in the web config and copied all the forms and files into the new site but still get the same error which is odd because I would think that when you let VS build the site it would set it up correctly.
Any help would be appreciate ...