I came across this neat tool (well a colleague of mine did and told me about it) from Helicon called URL Rewriter. Basically it allows you to use an ISAPI filter to rewrite the url that the server uses to work with in IIS and is essentially a copy of the mod_rewrite utility available in Apache.
It uses Regular expressions...so if you are not an expert in those (as I am clearly not) then this little tidbit of code may help. It allows you to rewrite the url that comes in as subdomain.domain.com as domain.com/subdomain. The top portion is the header and sets up logging and such...the real meat is the last two lines.
Here it is
# Helicon ISAPI_Rewrite configuration file
# Version 3.1.0.48
RewriteEngine On
RewriteCompatibility2 On
RepeatLimit 200
RewriteBase
ReWriteLog C:\rewrite.log
RewriteLogLevel 9
RewriteCond %{HTTP_HOST} ^(?!www)(\w+).christiedigital\.com
RewriteRule (.*) /%1/$1 [L]
Hope this helps