Update: Andy pointed out that Tom
Abraham has given this a thorough treatment here.

There appear to be cases where having BizTalk 2004 and the .NET
2.0 framework installed on the same machine may cause you some difficulty.  I’ve
seen a few instances where the BizTalk service will not start…or where the BizTalk
2004 process is loading (gulp) the 2.0 runtime (so says Process
Explorer.)  This latter behavior will result in the VS2003 debugger not attaching
correctly (among other things…)  See this kb.

To fix this, you can modify the BTSNTSvc.exe.config file to include the following
(after ‘configSections’):          

<supportedRuntime version="v1.1.4322"/>