Just to confirm

[squigfried]

.NET Framework 3.0 is compiled using the .NET Framework 2.0 compiler.
C# 3.0 is only present in .NET Framework 3.5.
Visual Studio 2008 appears to compile anything in .NET Framework 3.5 even if you tell it not to.

THANK YOU MICROSOFT YOU HAVE GIVEN ME YET ANOTHER HEADACHE.