Virtual Directory Not Found Exception

We have a web application that is running in IIS 8.5 that we've added a Virtual Directory to.

The VD points to a directory containing documents that the application needs to access.

We have access to the directory and can browse the files in IIS by right clicking -> explore.

And Web.config is set up like this:

<add key="NETWORK_SHARE" value="~\VirtualDirectory" />

Which is pretty much how we have it set up on another machine, however when we run our app, in the Windows Event Manager we are getting the following error:

Could not find a part of the path 'C:\Windows\SysWOW64\inetsrv\~\VirtualDirectory\...

It doesn't seem we should be getting the

C:\Windows\SysWOW64\inetsrv\

Are we missing a setting in IIS?

Thanks in advance for any assistance.