You should be able to run any versions (1.1, 2.0, 3.0, 3.5) side-by-side on the same server with no problems.
You can see what versions are installed by going to C:\WINDOWS\Microsoft.NET\Framework. There will be a folder for each version of the framework that is installed.
An application will use whichever version of the framework it was comipled against, it doesn't pick and choose based on what is installed.