How to use ServerManager to read IIS sites, not IIS express, from class library OR how do elevated processes handle class libraries?

Make sure you are adding the reference to the correct Microsoft.Web.Administration, should be v7.0.0.0 that is located under c:\windows\system32\inetsrv\
It looks like you are adding a reference to IIS Express’s Microsoft.Web.Administraiton which will give you that behavior