Installing WordPress in a sub-directory has always had its quirks, but an installation at GoDaddy is even a bit more confusing than most. I recently set up a new WordPress site in a sub-directory on GoDaddy and here’s how I did it:
I used GoDaddy’s WordPress installer to create a default WordPress site in a sub-directory. I then used the instructions found in the codex to move index.php to the web root and change the general settings to reflect the sub-directory. The instructions illustrate how to create an .htaccess file in web root to complete the install, or how to move, not copy, the web.config file to root.
But here’s the trick at GoDaddy: after you’ve moved the web.config file to web root, using the Java file manager, it looks like the web.config file isn’t there. It’s hidden. You just have to trust that it’s there. If you try to upload it again, you’ll get an overwrite warning, so the file is there, just hidden.