This happens in our Production Web server. Sometimes the processor usage spikes to 100% and doesn't come down. The server hangs and we need to force it by doing an IISreset. The process that takes all 100% is w3wp.exe. IIS logs for this period looks normal with regular traffic. This has happened...

I was troubleshooting down this very path when I got the reply in my inbox. In fact it was an issue with mixed 1.1 and 2.0 apps in the same application pool. Once I separated them and changed the default application pool to be .net 2.0 everything fell into place.