Walkthrough: Converting a Web Site Project to a Web Application Project in Visual Studio 2005 This walkthrough explains the process of converting an existing Visual Studio 2005 Web site project to a Visual Studio 2005 Web application project. The Web application project model uses the same conceptual approach as a Web project in Visual Studio .NET 2003. This includes a project file to include and exclude files and compilation to a single assembly. For more information about Web project conversion, ......
Scott Guthrie has a fantastic post on Web based framework development using the WepParts, Asp.net Ajax and .Net framework 2.0.
http://weblogs.asp.net/scottgu/archive/2007/02/20/asp-net-ajax-and-sharepoint.aspx?CommentPosted=true#commentmessage