>Can anyone explain to me how FOXISAPI finds an object within an EXE?
>

When the server is registered, the available classes are exposed to the OS in the CLSID entry in the registry.

>When I create a VFP application for the web and compile it as a DLL, then register it on my server and call it with FOXISAPI, it seems to work OK.
>
>If, however, I compile it as an EXE I get an error message which says 'class id not found'.
>

Hmm. Sounds like a versioning problem. Try Unregistering everything with the /u switch of RegSvr32.

>My question: when I pass an EXE name to FOXISAPI like foxisapi.dll/foxis.employee.startup, how does FOXISAPI know which EXE to run?

There should be only one with a given ProgID.

>Should I be using DLL's instead of EXE's?

You should be using exe COM servers, so you can use DCOMCNFG to have them impersonate a user. Otherwise, the only way to allow your class access to data folders is to grant access to the _IUSR account. Dangerous...