IIS 7 URL Rewrite - 403 Error

I know this question has been asked before, but I haven't found an answer to what I'm running into. I'm trying to redirect a domain (not a sub-domain) to a sub-folder. I'm running IIS 7 and I created a URL rewrite rule like this:

<rule name="subfolder" enabled="true" stopProcessing="true">
     <match url="(.*)" />
     <conditions logicalGrouping="MatchAll">
         <add input="{HTTP_HOST}" pattern="^(www\.)?domain.com?" />
         <add input="{PATH_INFO}" pattern="^subfolder" negate="true" />
     </conditions>
     <action type="Rewrite" url="/subfolder/{R:0}" />
 </rule>
 

With the rule off, I can navigate to a page like http://domain.com/subfolder/index.htm. With it on, I get a 403 error when I try to navigate to http://domain.com/index.htm.

403 - Forbidden: Access is denied.
 
 You do not have permission to view this directory or page using the credentials that you supplied.
 

How do I fix this?

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