You can tell .NET is installed by going to the Add/Remove Programs control panel. You'll see it listed under "Microsoft .NET 1.1 Runtime." If it isn't there, then you don't have it.
I'm afraid this is the second time I'm going to list a different opinion than Skuzzy in a month, which I don't think has ever happened before.
I was wary of .NET, but when an App I REQUIRED needed it, I did some research and benchmarks.
First of all, I'm not wild about the idea of adding a bunch of new runtimes into my system, and you shouldn't if you don't have to. Additionally, I monitor all my background Services and Startup Programs with a critical eye regularly.
That said, after I installed .NET, I found NO new startup programs and NO new Services starting up with my system. My Memory usage did not change one iota. My before-and-after benchmarks had no meaningful difference. My online games, and indeed all my online programs, acted exactly as well as they had been before.
What is .NET? In my mind, I think of it as a 22 megabyte collection of things similar to Visual Basic runtime DLL, except in this case, the DLLs in question allow programmers to create apps that make network and GUI calls very easily. Too easily, really. And these DLL's can easily be called and probably have lots of bugs and security holes and risks. Still, my Gut Reaction is that most .NET problems people have are REALLY from the cheesy applications these wanna-be programmers write using the .NET framework.
Just like how it isn't the Visual Basic Runtime Libraries that cause problems, but all the crummy VB applications people install that use it.
As for your Rocket Scientists' software, I would bet that it will NEVER be rewritten to NOT use .NET, so you might as well get over it. Software is being modified to USE .NET industry-wide, not the other way around.
Make a system backup. Install .NET. Check out your system. Run the update, Then install your App and see how it goes. If there are problems, then restore from your backup. Be vigilant about updates, but you should be doing this anyway...
-Llama