I have seen a couple of failures in IIS 7 on Vista when running a virtual directory on Framework 1.1 under the Default Website, when the default site is on Framework 2.0.
The most recent failure occured after upgrading the source for the virtual directory. Yesterday the same site worked fine, after today's upgrade the mappings for Framework 1.1 were lost. Did not delete the directory, just an in-place upgrade of a few ASPX files.
Restored the 1.1 mappings by running aspnet_regiis from the 1.1 directory. To be safe I put the default directory on 1.1 as well.
Maybe this is documented somewhere? I have not run into anything mentioning this yet, but in hindsight it seems prudent to have both on 1.1.