Thanks for the question!
The “Relative path…” option under the IIS step configuration requires you to have a folder of that name within the package that has been selected to be deployed.
If the package you are deploying does not have the folder inside it you can set a custom installation directory. To do this, first select “Configure Features”
Then select Custom Installation Directory
Enter the directory name, this could be a set value or taken from a variable. Also, set the Physical Path to Package Installation Directory. Documentation on this can be found here: https://octopus.com/docs/deployment-process/configuration-features/custom-installation-directory
If neither option covers the scenario you have you could add a script step to add the folder before the IIS step, or there is a Community step template that creates folders https://library.octopus.com/step-templates/b7211497-59ea-41e9-b466-c9a46b4c76b3
If you have any further questions please get in contact!