We are running FMPro unlimited on one computer which is connected as a guest to FMServer which is installed on a seperate computer. Unlimited is then serving several databases and static web pages to our intranet through the use of Instant Web Publishing . We would like to start using CDML to overcome the limitations of Instant Web Publishing and expand our intranet website by hosting these static html files currently being served by Filemaker(Web Companion)

on a IIs web server.

I have created and tested some simple CDML files by swithcing from IWP to CWP in the Web Companion Plug-in and placed these files in the Web folder of Filemaker along with the other static web pages. So far it works great. Filemaker Unlimited is acting as web server(static web content) and is hosting databases on the web.

Now I would like to take the next step, but am a little confused when it comes to Web Server Connector. I don't know if I understand all of the documentation. Do I place all of my CDML Format files on the web server along with all of the other static web pages or do the CDML files remain in the Web folder of Filemaker Unlimited?

That depends on platform and version.

Why do you want to use the WSC?