IISReset deletes physical folder with DFS setup

Question

I am trying to resolve an "automagic deletion of physical folder" issue with our web server setup.

We have 4 web servers with DFS (Distributed File System sharing) on the main folder of our root webserver. On one of the boxes the Virtual Directory name for a sub application is the same as the physical folder name.

On W1 the VD (Virtual Directory) name is "test" and maps to physical folder C:\MyTest

on W2 the VD name is "test" and maps to physical folder C:\test

If IIS on W2 is reset the physical folder on W1 disappears.

Question: Are the folders mapped to VDs in IIS temporarily deleted when an IISReset is issued?

TIA