I've had a little search and I was wondering if there is back compatibility for the .NET framework.
The real question is, if there's a program that uses .NET Framework 1.1, can I install 3.5 and be done, or do I have to install 1.1 and then if something uses 3.5 I have to install 3.5 as well?
Unfortunately you will have to install both versions. Older version of the framework are not automatically bundled with newer versions.
If you install something that requires 3.5, then you will have to install it. The way that .Net works though, you can have 1.1, 2.x and 3.5 all installed at the same time. Programs specify the version of the framework they need, and that version is loaded for them.
Especially with .NET 2.0 many things have changed in the .NET framework (not only at the language level). You will need version 1.1 to run programs linked against that version.
Now, if parts of your program use .NET 3.5, and you have access to all the source, I would recommend you port the entire application to .NET 3.5 and be done with it. It make take you a little longer, but it will be worth it moving forward.
I believe if you install the 3.5 framework, you get everything backwards to the 2.0 framework. The 3.5 (and 3.0) framework runs on the 2.0 CLR, so you're really getting the 2.0 runtime with the extra goodness of 3.0 and 2.5 on top of it.
You'd have to separately install the 1.1 framework.
You can see the installed versions here: C:\Windows\Microsoft.NET\Framework
Many, perhaps most, applications built for .NET 1.1 will run on later versions of the framework.
But there were some breaking changes, so the only way to be sure if your app build for .NET 1.1 will run on .NET 2.0 or later is to test it.
Microsoft documented the known breaking changes between .NET 1.1 and .NET 2.0 (see http://blogs.msdn.com/brada/archive/2005/11/14/492561.aspx) - but the links to this content seem to be broken :(
And I know of at least one undocumented breaking change due to a bug.