When we try to create a Virtual Directory using Property Page of Visual Studio.NET Editor we would get the error "Unable to create web site 'xxxxxx'. The web server does not appear to have FrontPage Server Extensions installed".
The error clearly points missing of FrontPage Server Extensions Installation on the target IIS server where are trying to create Virtual Directory.
The problem can be fixed by installing FrontPage Server Extensions on the target IIS server. Follow the installation steps outlined in the document to install required software and resolve the error.