if you deploy Framework 2.0 you'll have a new interface in IIS to choose
which framework version you want to use for a particular virtual directory.
there is other options like adding information in the Web.Config file, but I
have not tested this.
and if you start a new application, always use the latest version of the
framework which is the v1.1.4322 for a .Net 1.1 application.
most of the .Net V1.0 applications works with the V1.1 framework.
So try first then if there is any issue, ask to correct the server config.