It isn't clear from your post whether you are planning on compiling your application (using VS 2005) for the 2.0 Framework or whether you are just going to run it as is (compiled for 1.1).
While you can configure your 1.1 app to run under the 2.0 Framework, by default it will run under 1.1. Also, there is no way to know whether your app will have any compatibility issues under 2.0 until it is tested.
The hardware requirements would be different depending upon whether the machine is a desktop or server. The more RAM the better of course and I would consider 256 a minimum. You're probably OK with 1.0 gHz but once again, the faster the better.
Paul
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Microsoft MVP (Visual Basic)
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