When creating a site using Manage Content and Structure (sitemanager.aspx) , if the site creation takes too long to complete (20 min default), the system throws a time out exception. In such a case, we need to increase timeout value on the web.config on the LAYOUTS folder on 12HIVE:
To make this change, browse to the 12HIVE\LAYOUTS folder and open the web.config.
Add a new location section as shown below:
<httpRuntime executionTimeout="3600" />
This will increase the execution time out on new site creation page to 60 minutes from the default 20 minutes. Typically, 60 minutes should be more than enough. But, if this is not sufficient in your case, you can increase it accordingly.