I'm having the same issue on Windows 7. And despite what many people said above, Frameworks 3.0, 3.5, and all service packs of them contain, in its entirety, the .Net Framework 2.0 CLR and all associated libraries. Frameworks 3.x is just a marketting title. It's still 2.0 in the guts, with extra features like WPF and so on.
This is a bug in the installer. Thankfully, for me anyway, the warning was all bark and no bite. After it tried to (and failed) to install Framework 2.0, the installer continued on to successfully update Fences.
I'm SO GLAD that I didn't have to use that piece of crap "Impulse" nightmare of an installer to install version 1.0. It may be fine for gamer PCs where everybody is admin of their own PC, but it's a pain in the butt for us corporate admins in a secure environment whose user base is addicted to Fences! lol.