InstallShield 11.5 Professional and Premier are expected in under a month; Express tends to follow that by a couple months. That said I'm not aware of any reason Express 11 should break with the installation of .NET 2.0. If it does, we should find out why, and see if we can't fix it.
Please pardon my advice if it's a little bit off - I mostly work with the Professional edition, and the UI is a little different. Do you have paths to various .NET 1.1 utilities set in Tools > Options? If not, does setting them cause the problem to go away? Or if you already have them set, does removing them help?
What operating system are you working on, XP or 2000 or ..., and which SP? I'd like to reproduce this in house when I get a chance.
Michael Urman - Staff Software Engineer - Flexera Software: InstallShield Team