hi there i am a total newbi to this. i want to know how to set up a subdomain. i am using IIS7
the only way i access my test site is by typing in the ip-address of my machine xx.xxx.x.xxx
how do i get a url like http://mysite.com
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You need to register a domain (see name.com, godaddy.com, netsol.com, etc.), use the registrar's tools to set the domain's DNS to point at your web server's IP, and then make sure your web server is configured to accept name-based queries.
Firstly you have posted this in the wrong area. Please read the FAQ ("Server Fault is for system administrators and desktop support professionals, people who manage or maintain computers in a professional capacity.")
Saying that, you need to understand the differences between subdomains and the actual domain address. Subdomain are basically anything in-front of the domain address i.e. subdomain.domainname.com.
As Alex mentioned, you need to register a domain name. There are many out there, you don't require a hosting package as many of them offers, but you do require a registrar that will register the domain name. You then need to point this to your IP address, this should ideally be a static IP address (dynamic will always be changing unless you use something like dyndns).
You will also need to add port forwarding on your router, reconfigure firewall and reconfigure the IIS to accept the hostname.