Error while updating web.config via ServerManager - Cannot write configuration file - shows wrong path of web.config in error

Question

As part of installer code, we are trying to make changes to IIS (check and create virtual directory, followed by adding a section to its web.config file.

Installer was working fine till recently a strange error started haunting us and blocking the installer from proceeding

Error says /Core/Service/UserService failed. Reason: Filename: \?\ c:\website1\Core\Common\Service\userService\web.config Error: cannot write configuration file

Please note that "Default Web Site/Core/Service/UserService" is a virtual directory under "Default Web Site/Core" virtual directory in IIS.

"Default Web Site/Core" has physical path of c:\website1\Core\Common whereas "Default Web Site/Core/Service/UserService" is created with physical path of "c:\website1\Core\Service\UserService"

Not sure why error is pointing towards wrong folder path for web.config.

Code we have used is like this

using (ServerManager mgr = new ServerManager())
{
  //code to add virtual path to root website (default web site)
  mgr.CommitChanges();
}
using (ServerManager mgrpolicy = new ServerManager())
{
  Configuration config = mgrpolicy.GetWebConfiguration("Default Web Site","/Core/Service/UserService");
ConfigurationSection hndlesection = config.GetSection("system.webserver/handlers");
hndlesection["accessPolicy"] = "Read,Write"; //this value is dynamic based on installer input but hardcoded here for your reference.

  mgrpolicy.CommitChanges(); //issue comes after this line
}

we are running this installer on .net 4.8 windows application where the above code runs as part of a class library pointing to namespace System.Web.Administration.

Installer user is always system administrator and thus has all privileges.