Q:

Which component directs packets to the correct application

I set up a new IIS website which listens to port 85. IIS then reserves port 88 (and would tell me if an application is already listening on that port).
When the machine receives a request destined for port 85, the request is passed through to IIS.
What OS level component on a Windows based machine is responsible for maintaining the list of port/applications and for redirecting requests to the correct application?

A:

The protocol stack is an implementation of a computer networking protocol suite.The suite is the definition of the protocols, and the stack is the software implementation of them.
Windows TCP/IP Stack :-

The software that implements the various network protocols needed in
  TCP/IP environments is usually referred as a TCP/IP stack. On most
  systems including all versions of Windows NT, the TCP/IP stack is
  implemented in kernel mode. In the case of Windows NT, the tcpip.sys
  driver implements the TCP/IP stack.

In practical implementation, protocol stacks are often divided into three major sections: media, transport, and applications. A particular operating system or platform will often have two well-defined software interfaces: one between the media and transport layers, and one between the transport layers and applications.
The media-to-transport interface defines how transport protocol software makes use of particular media and hardware types ("card drivers"). For example, this interface level would define how TCP/IP transport software would talk to Ethernet hardware. Examples of these interfaces include NDIS in the Microsoft Windows and DOS environment.
The application-to-transport interface defines how application programs make use of the transport layers. For example, this interface level would define how a web browser program would talk to TCP/IP transport software.Examples of these interfaces include Winsock in the Microsoft world.

