C# web assembly

I want to be able to create a web application that comes from the following link:

http://www.asp.net/community/control-gallery/Item.aspx?i=69

However I am not certain where a root directory of a web application would be for this test application. How woud I set this up in visual studio 2010? Would I create an empty web application? If so, what would be considered the root directory to place the files for this application from?

I am referring to directions in the app that are listed here:

Unzip all the files into the root directory of a web application with a bin directory.

Run mk.bat to build MasterPages.dll into your bin directory.

Use your browser to request the test page http://localhost/yourtestapp/TestPage.aspx