I kept getting this wierd error when I started VS on a machine that I had initially thought wouldn't have anything to do with development.  I think it came about because I installed IIS after I installed the 1.1 framework.  Then I installed VS.  I mean, I downloaded and installed the framework, now why the crap wouldn't VS know that?

With a little research I found that others had had similar problems with their stuff.  It seems that there's something that can fix this though!

Open your command line (Start->Run, type "cmd", and press enter).  Navigate to the 1.1 directory on your machine.  Most likely C:\WINDOWS\Microsoft.NET\Framework\v1.1.4322

Within this folder there is a aspnet_regiis executable.  Simple type:

aspnet_regiis -i

It should do it's thing.  Reopen your VS IDE, and the problem should be gone.  If this doesn't work.  Try removing the 1.0 directory (Note: Only do this if you don't need side-by-side functionality), and doing it again.  If this doesn't work I'd suggest uninstalling and then reinstalling IIS.

Glad this annoyance is gone!