At the same time as .NET Framework 3.5 we shipped Service Pack 1 for .NET Framework v2.0. There is a standalone update for v2.0 SP1 for Windows XP and Windows Server 2003 and it ships out of the box with Windows Server 2008. For Windows Vista, it is included with Vista SP1. Of course, Fx v3. 5 depends on v2.0 SP1 so the installer for v3.5 will also install v2.0 SP1 if it is not on the machine already.

Some devs are aiming at using VS2008 to target Fx v2.0. Please note that you are really targeting v2.0 SP1. I blogged a pointer before on potentially addressing this goal, but it is important to stress again that the supported framework for VS2008 is v2.0 SP1 and not v2.0 RTM.