After upgrading from SharePoint 2 to 3 our content came up, but no changes could be made and when trying to sign on (via the “Sign In” link) I was getting an error of “Server Application Unavailable” and an event 1062 on the server with the text:

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.

What was aggravating on this count was that everything looked to be ASP ‘2’ (2.0.50727), but while digging I discovered that the ‘images’ and ‘inc’ virtual directories under ‘_layouts’ were set to ‘1.1’ (v1.1.4322).  The ‘inc’ path didn’t even exist and after creating it, it stuck to the ASP.net setting of 2.  The ‘images’ virtual directory was a different story as it kept reverting back to 1.1.  I finally recalled from a certification test that if nothing else the metabase.xml file for IIS contains all the settings for the web server and it can be edited by hand.  After looking into the file I discovered that the ‘images’ virtual directory had two entries, one with 2 and one with 1.1.  I deleted the 1.1 and the settings stuck to 2 when IIS was cycled; but unfortunately the error persisted.

It turned out that, even though it couldn’t be changed in the GUI, the ‘_layouts’ directory was set to 1.1.  I manually changed it in the metabase.xml file by copying the settings over from the ‘inc’ section and after cycling IIS the sign-in function worked and the error was gone!

Now to fix all the permissions on our custom web parts that got copied by the upgrade process and were set to the default folder permissions.