Depends if you run anything that needs it such as Ghost or Paint.net. If not you can get rid. It uninstalls readily enough, and can always be put back if necessary.
One word of caution, .net framework 2 is now available. It's just possible that sometime or other version 1.1 will cease to be available, which could cause problems.
Having said this, there is no conceivable reason why Norton should complain about it at all.