To resolve this issue
Solution 1:
You will need to cleanup the web.config that includes all the section Definitions that point to .net 3.5. The reason this fails is because these section definitions are already included in the root web.config in .NET 4.0 (see %windir%\microsoft.net\framework\v4.0.30319\config\machine.config) that include all the system.web.extensions declared already.
Solution 2:
Another quick fix is to have the application pool set to 2.0 just as your development machine appears to have,.