We moved to VS.NET 1.1 last week and all has gone pretty smoothly. I did discover the other day that certain web controls no longer served up the data which originated from various remote server shares. Once I knew the problem the fix was obvious: it was time to modify the default machine.config file installed with the 1.1 Framework (.../Framework/v1.1.4322/CONFIG/machine.config.)
Changing USERNAME="machine" to USERNAME="SYSTEM" in the PROCESSMODEL section did the trick. Perhaps .NET should be set to Username="SYSTEM" by default?
Update: Many thanks to Jim Blizzard and G. Andrew Duthie (again) for straightening me out on this and for showing me that it is definitely not a best practice. I'll be changing the machine.config username back to “machine” default and using impersonation in the web.config. See Comments.