If I'm not mistaken, all you need to do is give  the URL to those outside the
firewall who need access. However, I dont' know what the licensing implications
are.

But the problem I'm having here is that when I installed STS, there is
no virtual directories in IIS. All I just see is a web shared folder for
my site. But when I create a virtual directory pointing to that web
shared folder in wwwroot, the site no longer works. So I'm wondering if
there is some specific procedure I have to go through to get it
extranet.