I am not sure exactly how I finally set this up and I can't replicate the process unless I delete the app and start over which I am not going to do now.
This is what I think I did:
First, I chose the "manual configuration" then edited my WSGI file as instructed here: https://www.pythonanywhere.com/wiki/MultipleDomainsWeb2py
After this it was impossible to continue in any way. In the WSGI file I changed the folder name, adding the new folder name that I wanted to set up for the new app but there was no way to actually create the folder at that point. So after a while I deleted the app, there was nothing else I could do. There is probably a way to start setting up the folder structure manually but that doesn't seem like a good idea to me.
After the app was deleted, the WSGI file was not deleted so I started to "add a new app" again but this time I did not choose "manual configuration", and then, it worked. The folder was created, everything seems to be working.
What did I miss? It seems to be working fine this way. I'd appreciate any feedback or advise.
Ah not sure if there is a misunderstanding here. To clarify: