ResolutionTo enable WebDAV, you have to enable the Webclient service on your client workstation or inside the VE. In addition, you should ensure that Server service is also enabled and running inside the VE.
When you mark the folder as a web shared folder, it appears under the Default Website as a virtual directory. It can also be added through My Network Places as http://localhost/yourfolder.
If you would like to share any folder or any other sites through network places, you have to choose the other sites through the web sharing settings.
Note: To be able to access the folder without password prompting, you have to go to IIS>domain.com>virtual folder(which you shared)>properties>security tab>edit button>enable anonymous access checkbox.
The reason why you have to do these steps is that the default web domain is running under IUSR_TEMPLATE integrated user. After this, you will be able to add it through network places. The settings required for proper webdav will be enabled. In case you create domain through Plesk, it has its own IUSR for the domain , so you have to either create the domain manually or make custom changes after domain creation.
In case you would like to test webdav folder directly on the VE, it may be necessary to refer to the following Microsoft article to avoid loopback problem : KB896861