The best way for users to deploy multiple versions of ArcGIS is to use virtualization software. This approach allows users to continue to use multiple workflows and allows easy application development and deployment.
Initially we had undertaken development for ArcGIS 10 to support multiple versions of ArcGIS (9.3.1 and 10) being able to run on the same machine at the same time. Unfortunately what we found was the needs of such a deployment caused the experience to be unnecessarily complicated and introduced a number of areas of incompatibility. And as a result we will not support installing 10 and 9.3.1 “side-by-side”. We realize that at the UC we had initially announced this side-by-side support, but unfortunately that announcement was premature, and we will not be able to support this configuration.
We recommend that users who want to install 2 versions of ArcGIS use a virtualization tool (such as VM Workstation) and install the new instance of ArcGIS on that virtual machine. This solution is the best approach now with ArcGIS (9.2,9.3…) as well as into the future (10 and beyond).
At ArcGIS 10, if users install ArcGIS 10 on a machine that currently has a previous version of ArcGIS they will be prompted to uninstall that version prior to installing ArcGIS 10. We realize this is a change to what was previously announced functionality in ArcGIS 10, but the virtualization technology solves this issue in a much more straightforward and user acceptable manner.
ArcGIS Product Manager