If you try to run DNN 3.X using .Net 1.1 AND DNN 4.x using .Net 2.0, make sure you put the sites into separate application pools if they are running on the same server. Not doing so will result in the following error in the event log:

In versions of IIS before 6.0, each application runs in a seperate process during run time. IIS 6 brings the ability to run spearate application pools and applications that are assigned to different application pools never run in the same process. So this was all new to me

So, to change it is quite simple...

To create a pool designation in IIS 6.0

1. Open the IIS management console and expand the local computer by clicking the plus sign.
2. Right-click the Application Pools folder, point to New, and then click Application Pool. The Add New Application Pool dialog box appears.
3. Enter the new pool designation in the Application pool text box, and then click OK.

To assign a pool designation to an ASP.NET application in IIS 6.0

1. Open the IIS management console, expand the local computer by clicking the plus sign, and navigate to the folder that contains the ASP.NET application.
2. Right-click the application and then click Properties. The application's properties dialog box appears.
3. On the Directory tab, select the desired pool designation from the Application Pool list.

Configuring an ASP.NET Application for an ASP.NET Version