Hi Javi,
Firstly, it would be redundant to use both "virtually" and "totally" to describe the degree of isolation. Furthermore, there is a difference between them -- "virtually" means almost totally while "totally" brings the emphasis a step further to mean completely.
Secondly, a place that is isolated may be (1) due to its inaccessibility, but the place may also be (2) deliberately cut off from its surroundings, such that no interaction or trade can take place with the "outside world".
Based on your context provided, the place is isolated (inaccessible) due to its poor infrastructure and treacherous weather, so yes, you are right. I am not sure if you have gotten this IELTS passage from an actual practice paper; in my opinion, using either "virtually isolated" or "totally isolated" will suffice. (Just be aware of the difference in the degree of emphasis.)
Hope this helps.