We had a new application loaded this week from one of the suppliers and part of it relies on ASP.NET v2.0. Turns out it dropped into the DefaultAppPool along with some SBS specific applications; Backup, Monitoring and Remote. These rely on ASP.NET 1.1 and I found the tip-off in Scott Forsyth's blog about keeping your ASPs in separate pools.
Event ID: 1062
It is not possible to run two different versions of ASP.NET in the same IIS process. Please use the IIS Administration Tool to reconfigure your server to run the application in a separate process.
The solution is to create a new application pool (called KxEntiretyPool in this case) - see the screen shot - using the DefaultAppPool as the template. You can then go down into the Web Sites section, into Default Web Site and open the Properties for your new application. Simply change it over from DefaultAppPool to the new application pool and restart the Web Publishing service.