So there have been a few issues we have seen with .NET 2.0 when it is running on large 64-bit machines that have a lot of memory.  This is commonly seen if the machine in question has at least 4GB of RAM per CPU.  So like 32 GB of RAM with 8 processors.

There are a few issues that have been addressed around this situation.  There has been a hotfix to address one issue: http://support.microsoft.com/?id=938276

But now we have released SP1 and that has even more fixes that address this situation.  To get more info on where to get SP1, check out my previous posting on this: .NET Framework 2.0 SP1 has released

With my most recent customer that has this problem, we saw that as memory increased to a higher level, we saw a great deal of paging even though there was enough physical memory to hold the data.  We saw the page file jump up to about 20 GB even though we had enough RAM to handle the growth.  We also saw the # Induced GC's increase.  All of these fixes are included in SP1.

So if you are using .NET 2.0 on a x64 machine, I would strongly recommend upgrading to SP1.