[UPDATE]
Seems like it was a false alarm. Just received this:
Earlier today we said that .NET Framework 1.1 SP1 breaks compatibility with Vault. This turned out to be a false alarm. Our apologies.
For more information, see the following link:
http://software.ericsink.com/entries/false_alarm.html
Just got this heads-up from SourceGear:
Service Pack 1 for the .NET Framework appears to break compatibility in a way that causes major problems for SourceGear Vault.
It is VERY IMPORTANT that Vault users do NOT install this service pack on the machine hosting the Vault server. Doing so will cause damage to your Vault database.
Vault 2.0.6 will include a workaround for this problem and will be released as soon as we finish testing it.
Please monitor our support forum for any additional information:
http://support.sourcegear.com/
Dave
Just because I can...