To create a web application bundle choose to create a normal bundle project, but on the Bundle Content panel select the additional property entitled "Web Application Bundle". On the Bundle Properties panel enter a suitable context path for the application as the Web-ContextPath.
Bundlor is not used by default, you must create you own template file and then turn on incremental manifest generation.
Deploying PDE/Equinox Bundles to Virgo Web Server are not yet supported yet, although exporting the bundles (as Eclipse Plug-in JARs) and manually deploying to Virgo Web Server works. Please show your support on Bugzilla #329198.