I'm not sure which version of .NET Framework is required for GF3 to work, but make sure that you have the latest service packs for .NET Framework 2.0 & 3.5 installed.
I see that GF3 was built on 2008 version of Visual Studio (probably managed C++), therefore it'd be safe to assume that .NET Framework 3.5 is required.
http://www.microsoft.com/downloads/details.aspx?FamilyId=333325FD-AE52-4E35-B531-508D977D32A6&displaylang=en
and
http://www.microsoft.com/downloads/details.aspx?familyid=AB99342F-5D1A-413D-8319-81DA479AB0D7&displaylang=en
there's also compatibility update
http://www.microsoft.com/downloads/details.aspx?displaylang=en&FamilyID=6c095bba-6100-4ec9-9c54-6450b0212565
Cheers