When I use the default server in Visual Studio 2010 (Not sure if this is cassini or IIS?), the the last folder within the path at which I open the web site project (not a solution), is appended to the losthost url.
For example:
C:\myproject\mywebsite1\
Would open a url at the following:
http://localhost:x/mywebsite1/login.aspx.
This seems to cause problems with CSS files and javascript not resolving etc, but if I change the url to http://localhost:x/login.aspx I then get an error stating the aspx file is not present.
Why is an extra folder appended? This is highly annoying, I just want the files being served to be in the root URL path as they are in the website project.
Go to your project, right click, properties and under the web tab, you should have checked Use Visual Studio Development Server, there you can specify a port and a virtual path, probably you have /mywebsite1 there, just delete that virtual path.
You asked this some time ago, but hope it helps anyway.