The .NET runtime in question exists on the server (c:\windows\microsoft.NET\Framework\V1.1.4322), but isn't coming up in the properties dialog (ASP.NET tab) in the IIS properties.
I know there is a command to install this sucker, but it escapes me.
I think the command you're looking for is Aspnet_regiis: http://www.microsoft.com/technet/prodtechnol/WindowsServer2003/Library/IIS/1f74eac5-9005-4f91-9137-f63b73eefde8.mspx?mfr=true
Aspnet_regiis -s W3SVC/1/ROOT/SampleApp1
execute that from inside the C:\WINDOWS\Microsoft.NET\Framework\v1.1.4322
dir