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This is because you are passing the full url instead of relative url Replace http://dev-env/sites/site/subsite/ With subsite i.e elevatedWeb.Webs.Add(title, title, strDescription, nLCID, WebTemplate, uniquePerms, bConvertIfThere);
I've done some extensive research on this issue and I finally have a working solution. I've done the same as @tomvanderhoek, i.e. installed VS 2013 side by side with VS 2012. This is a bad idea if you're developing workflows. For a reason specified on another thread (Retract WSP in VS 2013 - Delete Content Types) I cannot use VS 2013. So I rolled back to VS ...
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