In .Net framework 1.0 and 1.1, fusion is not able to download assemblies hosted in web servers with http compression enabled.

This is a bug in fusion, and it has been fixed in .Net framework 2.0.

We may backport the fix to 1.0 and 1.1, depending on the demand. The fix is non-trivial and affects all http assembly download case. Which means it has a high probability of regression.

Until then, please consider Deploying assemblies using cab files. It gives a much better compression ratio. And it works in all versions of .Net framework.