Hi, This is what I did when I had this problem
- Run dotnetfx.exe from ArcSWAT folder
-Then go to Control Panel by clicking on the start menu
-Select ArcGIS desktop and click on Change/Remove
-Then insert your ArcGIS 9.1 CD
-Select the modify radio button
-click next and enable
dot.net from the list of extensions
-Continue to install ArcGIS 9.1
-Now install ArcSWAT from the ArcSWAT folder
Hope this helps
Rajith