Wordpress theme not recognized when using virtual directory (IIS)

I have clean WP 4.1 installation in a subdirectory.

The overall solution structure looks as follows:

application
    plugins
    themes
vendor
wordpress
index.php
wp-config.php
web.config

I serve it using IIS 7 on Windows 8.1.

My custom theme is located outside the solution root and I map it as a virtual directory into application/themes/mytheme.

All files inside mytheme folder are accessible:

http://localhost/application/themes/mytheme/style.css
http://localhost/application/themes/mytheme/screenshot.png
...

I've also tried allowing directory listing for http://localhost/application/themes/mytheme/.

But WordPress doesn't recognize it.

Where the problem could lie?

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P.S. Also asked the same question on http://ift.tt/1AFL7pY