Its common knowledge that we can run ASP.Net v1.1 and v2.0 side by side. If both the versions of .Net frameworks are installed on the server, IIS management console will provide a new ASP.Net tab in the property page (right click on your IIS application/vdir, select properties). Here you can select which version of ASP.Net you want to target.
If you are moving from v1.1 up, it is highly probable that you will have some applications still using older versions of .Net, in that case your new application in the same server will need to be configrued for ASP.Net 2.0. Even after you run if you get an error saying “Server application not available”, check to see whether new application is running under the same application pool as older ones. By default, it will be using DefaultApplication Pool. Create a new application pool and assign this pool for your new ASP.Net 2.0 application.