ASP.NET 2.0 Web Extension not enabled warning; but it is.

I'm working on a web service that is connecting to a Win 2k3 R2 Ent. server. For the particular web application ASP.NET 2.0 is enabled. Whenever I open the Visual Studio web service project I get the message The ASP.NET 2.0 Web extension has not been enabled on your Web server. Microsoft visual STudio has been designed for use with ASP.NET 2.0. Would you like to enable ASP.NET 2.0 on your Web server? [Yes|No|Cancel].

When I check the server ASP.NET 2.0 *is* enabled and the default for the Web Application associated with the web service but pressing Yes doesn't stop the message from appearing the next time I open the project.

Has anyone encountered this before, is there a workaround? What am I missing?

[896 byte] By [PeterRitchie] at [2007-12-23]