".Net assemblies can be deployed and run side by side" – remember this sentence?
Well, in general it is true, but there are some caveats you have to remember. First one, web applications are usually bound to some version of .Net runtime. So, if you install .Net framework 2.0 and in the same time BizTalk 2004 wizard relies on .Net framework 1.1 – there will be a confuse definitelly, when publishing orchestrations as web services. There might be also other problems for the BizTalk runtime itself, so it is worth to update BizTalk configuration itself.
To keep things short, if you have VS.Net 2005 and BizTalk 2006 on one box, just keep in mind (or bookmark, or remember keywords for the search engines) these URL’s:

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