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Its not do to incompatibilities - its because MP runs on .NET 2.0 and VS was updated for that, hence VS2005. VS2003 is for .NET 1.1 only. A new version of the .NET framework was released by Microsoft to support new language and windows features. VS2005 has some nice new features too for .NET 2.0.

Both the .NET frameworks run perfectly fine side by side, as do the two development environments.

Sam