Does the machine originally have 1.x on it? Most likely.

If so, you should make sure that ASP.NET 2.0 is bound to IIS as the default.
When you attempt to run a 2.0 site on IIS configured for 1.x, it bombs.

Solution 1:
aspnet_regiis -i

From the 2.0 framework directory under windows, it installs 2.0. Downside,
1.x sites become 2.0.

Solution 2:
Find the web in question and fix it to point to 2.0 instead of 1.x. Can also
be done with aspnet_regiis and the -s flag, but I do not have syntax. It is
on the MSDN site. You can also do it by hand in the app configuration
(Configuration button on the Virtual Directory/Home Directory tab of the
site's properties). YOu have to manually point every ASP.NET extension to
2.0 this way.

NOTE:
If you have SharePoint on the box, it changes the rules a bit, as SharePoint
takes over port 80.