I am getting a lot of questions about serialization compatibility between .NET Framework 2.0 and 1.1.
To make Binary Serialization (the BinaryFormatter) and.NET Remoting work across these Framework versions, a patch must be installed for .NET Framework 1.1.
To obtain the patch, first install Service Pack 1 for .NET Framework 1.1. Then, contact Microsoft Product Support Services (e.g. through here: http://support.microsoft.com/oas/default.aspx?Gprid=3041) and request the Version Tolerant Serialization patch. Mention KB article 907262 - this is an unpublished article so you will not be able to find it, but PSS engineers should know what you are referring to.
Update: To make the PSS process even smoother, you can give them the internal MS hotfix numbers: 258345 and 258416 (one of them is for Win2k3 and the other for WinXP)
As far as I understand you will not be charged for the support incident (or you may be charged at first but the charges will be voided once the support engineer learns that a hotfix directly solves your problem).
If you encounter any problems during this process, please contact me directly at (my user id from my blog at microsoft.com). In fact, I would appreciate a quick email even if the process goes smoothly - we are currently trying to find a better way to release the patch, and having more customer data will be useful.