I have seen many members in ASP.NET forums having this issue, and here is the fix:
This issue comes when we have both ASP.NET 1.1 and 2.0 framework on the same machine on IIS 6.0 and above, so we need to make sure that 2.0 app run in their own
application pool.
Creating a new pool for 2.0 and 1.x applications fixes this issue. Refer these links on how to create and manage app pools:
http://www.microsoft.com/technet/prodtechnol/WindowsServer2003/Library/IIS/b5488995-fa99-460f-96d7-29d1ddcf3fac.mspx
http://technet2.microsoft.com/WindowsServer/en/Library/1b758129-e461-4b49-ab63-113c4341133b1033.mspx
Hope this helps!