I will answer the second question first. You local users will be able to see whatever is on the server regardless of whether or not they are a fully qualified domain name.
As for multiples sites, you should research “Virtual Hosts” to find out how to add multiple Web sites to IIS. Personally I do not like using IIS, I am a hardcore Apache person. I find that in addition to being faster, more secure, etc… etc… If you are using a Red Hat based Linux (my favorite is CentOS) that you will find they are much, much easier to administer.
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