We have set up one IIS 5.0 server with virtual directories that point to web folders on other servers. Make sure that you deselect anonymous access and select integrated windows authentication in the anonymous access and authentication control section of the directory security tab. This way you can apply NTFS permissions to each web folder on each of your 7 servers
Here's how to create a virtual directory:
Create Virtual Directories in IIS 5.0
1. Click Start, point to Programs, click to select Administrative Tools, and then click Internet Services Manager.
2. Expand the server name.
3. In the left pane, right-click Default Web Site, point to New, and then click Virtual Directory.
4. In the first screen of the Virtual Directory Creation Wizard, type an alias, or name, for the virtual directory (such as MyWebData), and then click Next.
5. In the second screen, click Browse. Locate the content folder that you created to hold the content. Click Next.
6. In the third screen, click to select Read and Run scripts (such as ASP). Make sure that the other check boxes are cleared. Click Finish to complete the wizard.
7. For ASP content, you may want to confirm that an application was created. To do this, right-click the new virtual directory, and then click Properties.
8. On the Virtual Directory tab, make sure that the virtual directory name is listed in the Application Name box under Application Settings. If it is not, click Create. Note that the application name does not have to match the virtual directory alias.
9. Close the Properties dialog box.
Remember to deselect anonymous access.
Good luck
Kevin