I've been using these techniques since NT 4.0's Option Pack. People just don't know how powerful the built-in stuff is. And now with quota management and AD, it can be very powerful in an ISP hosted environment (it's what I use).
Another tip: You can create sub-Virtual directories, but they must be from within the FTP's VDs. I often create Unix-like links for users to get into certain directories of my domains. For example, say we have a domain called "domain.com". On my server, that would be:
E:\Users\eric.duncan\domain.com\www\default.aspx
Say I want to give Jim Bob access to this domain, but not to all of the domains under my username. But there's a problem, the user already has access to their own directory:
E:\Users\jim.bob\
This user accesses their account via the IIS FTP service's virtual directory called "jim.bob":
FTP Sites
-- Public FTP
------ jim.bob (which points to the user's Home directory above)
What I do is create an empty directory (described in this article) named the domain + lnk, but this directoy is in the user's normal Home directory:
E:\Users\jim.bob\domain.com.lnk
And then create a sub-virtual directory, named the same under the user:
FTP Sites
-- Public FTP
------ jim.bob
---------- domain.com.lnk
Now when the user logs in, they will see their home directory, with a new directory named domain.com.lnk. Changing directories to this location forces the FTP's virtual directory to change it's location to my directory:
E:\Users\eric.duncan\domain.com\www\
Just remember to give jim.bob access to that directory, else he will get an Access Denied.
Oh, that was another tip: To set permissions, do it at the physical-directory level (as I've done above). Mix it all with quotas, and there isn't a reason for me to use anything else.