You configure the ASP.NET version on IIS7.x on the application pool that the site is running in. To find what pool your site is running in, select the site in IIS Manager and select Advanced Settings in the right hand Actions pane. This will pop up a window like this:
Jot down the name of the Application Pool then close this popup dialogue.
Navigate and open the Application Pools feature in IIS Manager. Select and right click on the application pool noted above then select Advanced Settings:
I've highlighted three settings:
.NET Framework Version - this is a dropdown where you can choose which .NET Framework to run
Enable 32-Bit Applications - if you're running a 64 bit version of Windows 7 or 2008R2 then this option will be important if your application consumes 32 bit only components. Even if it doesn't, knocking the pool back to 32 bit more can be useful when trouble shooting mysterious failures.
Managed Pipeline Mode - IIS supports two types of pipeline now. Classic and Managed. If your application is being migrated from IIS5.x or 6 then I'd start off by changing the pool to run in Classic Pipeline mode.
To configure authentication navigate to the site in IIS Manager and select the site in the left hand tree view. This will open the "Features View" in the middle panel.
Double click on the Authentication icon:
This will open up a list of the various authentication settings available to you:
From here you can right click on each Authentication setting and enable/disable as per your needs.