Hello Omi!

first, junction (as you read in receipt) is needed for ability to launch 
development version of web2py on the same source.
anyway you can copy all web2py folder and syncronize them as needed

Step 2.3.2 Configure routes - is standard for web2py and described in the 
book.
it sets relative path to your application files.

In the beginning you should realise where are your application directories. 
You should check they are workable with standard web2py.py launcher.

Then check permissions for folders - so IIS can access them with given 
credentials (it is described in the receipt).

you should skip 2.3.4 - it has sense on big production server if any

As I see your isapi_web2py.py script cannot access application files 
(directory is empty)
try at first simple copy instead junction

In the end of 2.3.1 there are typos in path - slashes are escaped - be 
careful or just allow "All Unknown ISAPI Extentions".

for testing try in the section for interactive launch of isapi_web2py.py 
script 

if __name__=='__main__':
  import gluon.main
call from command line - to be sure gluon is on the path and accessible

Write here your directory configuration if you are still lost.
Think about web2py directory as a single ready application which just should 
plugged to IIS.

Best regards


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