I needed to create a new sub-site underneath an existing SharePoint site, which is located at http://server/site1. The sub-site’s URL should be http://server/site1/site2. The simplest way to create a new site is to use an option normally exposed through the UI, such as the Create page under the Site Actions menu. However, in this case, I’m working with an existing site that’s customized so that the Site Actions menu isn’t available.
The first idea that occurred to me was to use Central Adminitration to add a new site collection. To do so, I selected Create Site Collection under the Application Management menu. In order to create the new site collection under the desired path, I decided to define site1 as a managed path. This worked well enough and allowed me to create a new site collection under http://server/site1/site2. However, to my horror I discovered that the site located at http://server/site1 had disappeared, replaced by the dreaded HTTP 404 screen!
Apparently when a path is defined as a managed path, SharePoint treats it as part of a longer URL and no longer allows a site to reachable there. Fortunately, the fix is simple, as removing site1 from the list of managed paths reverts things to the previous state.
So back to the original goal of creating a new site, one solution is embarrassingly simple. To reach the desired form, browse directly to the URL for the application page. For instance, the URL for the Create page is http://server/site1/_layouts/create.aspx.
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Nice post. Here is the one more post explaining Managed path in Sharepoint
http://sureshpydi.blogspot.in/2013/03/share-point-managed-paths.html