Can I use Simple DNS Plus to make my web-server access different directories / files on my computer for different domain names? (Sometimes referred to as "virtual hosting")

Simple DNS Plus is part of the solution, but you also need a web-server that supports this.

A URL consists of 3 parts: Protocol (http://), Domain Name (www.domain.com), and Path/File (/somedir/page.htm).

The Protocol tells the browser how to communicate with the web server.
The Domain Name is used to locate the IP address of the web server (through DNS).
The Path/File is sent to the web server as part of the http request.

When a browser opens a web-page, it first locates the web server's IP address through DNS. This DNS request only contains the Domain Name - not the Path/File.
Second it connects to the web server and sends a HTTP request, which includes both the Domain Name and Path/File.

If the web server supports different domain names, it then serves the page from a directory according to the domain name supplied in the request.

This is supported directly by Microsoft IIS (Internet Information Server) for all Windows Server versions, Windows Vista, and Windows 7 - Click here to see how

It is however not supported directly by Microsoft IIS or PWS (Personal Web Server) for Windows 95, 98, Me, NT4-Workstation, 2000-Professinal, or XP.
You can get around this to some degree with scripting - Click here to see how

There are also several free / inexpensive web servers available that do support it directly on all Windows platforms. For example:

"Apache" http://httpd.apache.org/
This is the "original" and still the most widely used web-server on the Internet.
It is free (or OpenSource), but because it uses text configuration files instead of a GUI, it is probably not the most user friendly choice on Windows.
And it is also supported directly by Apache.
For information about virtual hosting with Apache, see
http://httpd.apache.org/docs-2.1/en/vhosts/name-based.html

"Abyss web server" http://www.aprelium.com

REFERENCES:
For more information, please see the following knowledge base articles:

KB Article Virtual hosting with IIS / PWS using a single web-site
KB Article Virtual hosting with IIS (Internet Information Services)

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