This is how I spit out .NET 1.1 versions compiled against WSSv2 API and .NET 2.0 compiled against WSSv3 assembly. It will work for VS 2005 and 2008.
You will need to use MSBEE http://www.codeplex.com/Wiki/View.aspx?ProjectName=MSBee
Working with .NET 1.1 with Visual Studio 2008
Some tips
Open up *.csproj and find out where the SharePoint dll is referenced and change to something like this which changes the referenced assembly depending upon your target (FX1_1 means you are targeting .NET1.1 and therefore WSSv2)
<Reference Include="Microsoft.SharePoint">
<HintPath Condition="'$(TargetFX1_1)'!='true'">pathto\WSS3\Microsoft.SharePoint.dll</HintPath>
<HintPath Condition="'$(TargetFX1_1)'=='true'">pathto\WSS2\Microsoft.SharePoint.dll</HintPath>
</Reference>
Use conditional compilation for differences where necessary
#if FX1_1
// WSSv2 specific code
#else
// WSSv3 specific code
#endif
If you get a compiler error but the code looks right it may be that the error is only for .NET1.1 / WSSv2 and compiles fine in .NET2/WSSv3. Check the output tab to see for which target the error occurred
You will also need to master some MSBUILD ninja moves to keep a 1 step build process and keep yourself sane http://brennan.offwhite.net/blog/2006/11/30/7-steps-to-msbuild/ using MSBUILD you can get VS to compile both versions at the same time without resorting to the command line.
This will run the .NET1.1 compilation after .NET has finished and output some messages to the Output window to help you work out where errors occurred.
<Target Name="BeforeBuild">
<Message Text="--- Building for .NET 1.1 ---" Importance="high" Condition="'$(TargetFX1_1)'=='true'" />
<Message Text="--- Building for .NET 2.0 ---" Importance="high" Condition="'$(TargetFX1_1)'!='true'" />
</Target>
<Target Name="AfterBuild" Condition="'$(TargetFX1_1)'!='true'">
<MSBuild Projects="$(MSBuildProjectFile)" Properties="TargetFX1_1=true;" />
</Target>