A very frequent question from the users of Visual Studio 2005 is "what should I do to build .NET Framework 1.1 applications with VS2005?" For now there is no simple solution because it depends on the things the User wants to achieve. Of course you can always edit and debug application on .NET Framework 2.0 using only features of .NET Framework 1.1 and at the end build it from command line against .NET Framework 1.1. But to build against .NET 1.1 each time you need to configure a little bit more. The detailed description of environment configuration is here.

There is also an ongoing process of adding this feature to the MSBuild which is described here. Watch this blog as it is going to come quite soon.