I have a big project which was done using Visual Studio 2003 and .Net Compact Framework 1.0. After a year, our company unearthed this project. I opened it using Visual Studio 2005. This is the error message I am getting.
Localization of projects targeting .Net Compact Framework 1.0 requires version1.1 of the .Net Framework SDK, which is not detected on this machine.
So the only workaround is to install SDK 1.1 is it

Importing a 1.0 project to 2.0
Quantumdude
It's not a workaround, it's a requirement for opening V1 projects. After that you will have the option to convert it to V2 and you can remove 1.1 SDK if it's a problem for you. Alternatively create blank V2 project and add all files from old project into it manually.