Thanks a lot for quick reply Cheeso!
I have corrected the IIRF.ini using "RewriteRule" now. But the problem still persists. I think I got the reason and would like to have confirmation from you.
I am running this website on cloud server. This server has other three sites running on it. A record of all sites is same that is ip address of my cloud server. As I said earlier I have changed DNS entry of mydomain.net to *.mydomain.net. It's A record is
also pointing to IP address the of cloud server
Now my IIRF.ini is in the root folder of mydomain.net. It seems that IIS is not able to take my http://xyz.mydomain.net request to vdir of mydomain.net. As there is no unique IP associated with mydomain.net
I have reached to this conclusion because as I said whenever I try to access the site using http://test.mydomain.net....
log file is not getting updated, and I get "Directory Listing Denied" error.
It seems like I need to have at least one unique IP assigned for mydomain.net on the cloud server.