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Source: Microsoft Support
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The installation of Framework 1.1 will succeed however the ASP.NET State Service will not run if the following conditions are true.
The target computer is running Windows Server 2008 64 bit (not an issue for 32 bit)
The ASP.NET under Application Development role service has not be installed prior to Framework 1.1
The ASP.NET State Service will not start. To confirm, navigate to Start | Control Panel | Administrative Tools | Services. Right Click on ASP.NET State Service and select Properties. Note that the Path to the executable points to a file that is not in the specified path.
Prior to the installation of the Framework 1.1 enable the ASP.NET from the Windows 2008 Server Roles - Web Server (IIS) -> Application Development -> ASP.NET and accepting the required dependencies.
If this recommendation has not been followed and the Framework 1.1 has already been installed
· Un-install the Framework 1.1 using the conventional Control Panel | Programs and Features.
· Install Web Server (IIS) -> Application Development -> ASP.NET at minimum, accepting the required dependencies and the remove the same selection.
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