You can install .NET redistributables in any order. This is similar to the case of VBasic runtimes, in which several may be installed on a workstation.
There are multiple releases of the .NET Framework (v1.0, v1.1, v2.0). These multiple .NET Framework releases can be installed "side-by-side" on a single computer, in the same way that a user can install multiple versions of an application such as Office (for example, Office XP and Office 2003 on one computer). On Windows XP and Windows Server 2003, the .NET Framework releases run side-by-side in different processes. In other words, one process can be running an application on the .NET Framework 1.0 and at the same time another process can be running an application on the .NET Framework 1.1.
Side-by-Side Runtime Behavior of Applications on the .NET Framework 1.0, 1.1, 2.0
Managed applications: When the application is started up on the .NET Framework 1.0, 1.1 or 2.0, the CLR (mscoree) looks at the .NET Framework version recorded in the application and tries to run the application on the version of the .NET Framework that the application was compiled with. If that version is not installed on the computer, the CLR will attempt to start the application on the latest .NET Framework and CLR, for example, an application compiled for .NET Framework 1.0 running on a computer with only .NET Framework 1.1 will be rolled forward to run on the .NET Framework 1.1. Likewise, an application compiled for .NET Framework 1.1 running on a computer with only the .NET Framework 2.0 will be rolled forward to run on the .NET Framework 2.0.
Because there are "breakable" differences in the version, this promotion may not succeed in running a versioned managed application on the promoted runtime.