You can't use Wordpress MU with subdomains on IIS within shared hosting. This is because IIS does not let you setup a wildcard for a website the way that you can in Appache. For example in Appache you can create a website with the following host header *.mydomain.com. All the following requests will point to that website
www.mydomain.com test.mydomain.com etc.
In IIS you have to place the
www.mydomain.com & test.mydomain.com. into the Host Header section of IIS. You are not allowed to use the *. They only way around this is to have a site with no host header, and that is the default site.
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