Yep, that worked. The error is gone now and I'm waiting for the professor to try adding problems to her class again. So you might want to put something in the installation wiki and maybe a comment in site.conf stating that $webwork_url MUST be set to "webwork2" for now? Of course apparently most people don't go changing things up immediately when they install new software, probably explains why this issue hasn't come up before. :)
Installation
/webwork2/instructorXMLHandler: Not Found
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