All projects you build with Microsoft Visual Studio 2005 target version 2.0 of the .NET Framework. It does not allow you to build projects that target previous versions of the .NET Framework. While Visual Studio 2005 will upgrade projects from previous versions, if you choose to do so, you'll no longer be able to open it with the earlier version.
In order to deal with this, Microsoft supports side-by-side installation of Visual Studio 6.0, Visual Studio .NET 2002 and 2003, and Visual Studio 2005 all on the same machine. This allows you to keep your current environment installed in order to maintain existing applications and at the same time gradually start to use the new environment for new projects. While I've never actually had them all installed, I do currently have versions 6.0, 2003, and 2005 all installed... so it does work.
For more information about installing multiple versions of Visual Studio, see the links below which regards for Installing Visual Studio Versions Side-by-Side from the Visual Studio documentation.
http://msdn2.microsoft.com/en-us/library/ms246609(VS.80).aspx
The Full details here
http://www.15seconds.com/issue/060202.htm
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