It is possible to have an alternative language site by publishing the other language to a Subfolder and linking to the Subfolder from a 'Gateway' site. This is explained in the Karelia Sandvox documentation [Creating a Multilingual Site].

It is also possible to have one main language site and link to an alternative language from the Site Menu using an External Page that links to the Subfolder with the External Page checked in the Inspector to Include in Site Menu.

I used a similar technique on the [Three Commenting System] test site that I created. Hopefully this screen capture helps to explain the settings: