The virtual path '/_catalogs/masterpage/default.master' maps to another application, which is not allowed.

I have seen lot of users having following error when adding a custom web app in layouts folder and when trying to use default.master page for custom web app pages.

Exception Details: System.ArgumentException: The virtual path '/_catalogs/masterpage/default.master' maps to another application, which is not allowed.

Firstly make sure that you have created your web app correctly and have done all the configurations or settings. For details on doing this please check this great blog post by Roni

And finally if the error occurs then try commenting out the line
'<'authentication mode="Windows" /'>'
in your web app web.config file. This solution has fixed the error for me and for my friends.