If you've made the jump to Vista and IIS7, like I recently did, and you've installed asp.net 1.1 for some reason (like trying to use the unsupported VS 2003 as I have), then you may be seeing this message, even when you are opening asp.net 2.0 sites in VS 2005.

You've checked in IIS, and the site is definitely pointed to an asp.net 2.0 application pool, but you get this message every single time you open the site.  Today, I came across this article, which spurred me on to find a slightly better solution.  Instead of deleting the 1.1 handlers, I just moved them down below the 2.0 handlers in the Ordered List view of the Handler Mappings.  Voila, no more error message, plus I don't lose the handlers that I might need at some point when testing an old, unsupported VS2003 app.  For having everything in one place, I'll put all of the linked article's instructions and mine all together here.

1. Open Internet Information Services (IIS) Manager
2. Select the root node
3. Open Handler Mappings
4. Remove each entry that points to ASP.NET 1.1
5. Click on View Ordered List... in the Actions area.
6. Select each of the handlers that have 1.1 in the name, and move them down below the handlers that have 2.0 in the name.
7. Reopen your VS 2005/asp.net 2.0 project, and no more error message.