Net 2.0 and Net 1.4 are different installations. If CAII needs 1.4, then you need to install 1.4. There is no need to uninstall 2.0. They co-exist quite happily.
Edit:
For those who don't know, .NET is a kind of operating system which runs on top of the 'real' operating system, kind of like the Windows emulators you see for MACs. .Net runs under several different OSes including OSX, Linus and, of course, Windows. It's main purpose is to provide additional security to allow you to run remote application without fear of hackers taking over your computer (which is why it is called .NET). However, as Tomas and Ainwood have demonstrated, it can also be used to put together some pretty darn nice applications which run locally.
Unlike all previous Microsoft OSes, newer versions of .NET are not backwards compatible with older ones. This is a very sensible move on Microsoft's part. Back in the days of DOS, people would find all the internal entry points, ISR handlers and data structures. Then they would access them directly. This included some very big software companies.
Consequently when Microsoft went to upgrade the OS to a newer version, they had to keep all of these supposedly internal structures absolutely identical from one version to the next. Even the bugs had to remain! Same thing with Windows. While people could no longer access internal data structures anymore, all the APIs, ActiveX interfaces and the rest of it had to remain absolutely identical from one version to the next, even WRT undefined behaviours. This imposed huge expenses on the company and undoubtedly were a major cause the delays they are legendary for.
.NET is different. Microsoft does not guarantee that one version will be identical to the next. Instead,
a programme which uses .NET 1.1 will expect 1.1 to be installed on the computer and will access that. Other versions may be installed at the same time. Each 'assembly', as Microsoft calls it, identifies the version of .NET which it will run with and that is the version which is used.
Since Microsoft does not guarantee backwards compatibility, if Ainwood ever decides to upgrade his programme to 2.0, he will have to verify that there are no subtle differences between the one and the other. This would also be true if any other assembly used CAII. It would ask for the correct version of CAII to be installed on your computer and would complain if it was not, just as CAII itself expects the correct version of the framework.