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.Net v4 vs v2 - In-Process Side-by-Side

In-Process Side-by-Side, or In-Proc SxS is a process whereby assemblies written in .NET4 and .NET2 co-exist together in runtime. This is possible because a process is able to host multiple version of .NET CLR in a single process. This means if an application is recompiled to run against the .NET Framework 4 runtime and still has dependent assemblies built
against .NET 2.0, those assemblies will load on the .NET 4 runtime transparent to the user.
It faces problem (if .NET4 runtime is used) in the following areas:
a) Shell Extension support is limited. Application built with earlier version wil fail.
b) C++/CLI section which specifically states that a pre-2.0 mixed mode assembly can only load in a v2 CLR. The v4 CLR does not
support this scenario. There is no solution to this problem. You have to recompile the mixed mode assembly under v4 or switch back
to v2 for your application.
http://msdn.microsoft.com/en-us/magazine/ee819091.aspx