You may know this already but if you're running ASP.NET 1.1 and ASP.NET 2.0 on the same box then make sure you create a separate application pool for ASP.NET 2.0. You can just clone the Default Application pool if you want, but that can have security implications if you're box is a shared hosting environment because re-using NETWORK SERVICE as the process identity will leave your 2.0 sites open to file harvesting by Full Trust 1.1 apps (that said you are encrypting your connection strings, aren't you? :-) ).
Once you've created the app domain, goto the site or vdir that needs to run ASP.NET 2.0, open the property pages, choose ASP.NET 2.0 from the ASP.NET tab then choose the new ASP.NET 2.0 Application Pool in Home Directory Tab -> Application Settings: Application Pool drop down.
Failure to run ASP.NET 2.0 in it's own app pool will result in the evil 'Server Application Unavailable' message because the ASP.NET 1.1 and 2.0 runtimes can't co-reside in the same worker process.