Hi Brian,
Deleting the site folder is probably the problem, you should restore it from the install files. When secondary sites are created new folders are created, but the first site folder is included in the install and expected to be there.
Things changed in the skinning in recent versions and skins on the community download page are not up to date with the changes. I would stick with the included skins which I have kept up to date.
I think while it can work using IIS 7 integrated mode, it works better if you try using a "Classic" app pool.
Hope it helps,
Joe