What are the steps to updating ASP.NET 3.5 Web application (compiled using Visual Studio 2008) to SharePoint Server 2007?
You can't just "move" an ASP.NET application to SharePoint. The security model is different, the navigation model is different, the deployment model is different, etc.
You basically have three choices:
I'm not sure I quite understand the question. What are you trying to accomplish? Host the web application in sharepoint? If so, i would host the web application elsewhere and use the page viewer webpart to display the site in sharepoint.
Oh yea, now I realize you are the same person that asked the other question I answered ( MOSS 2007 + Visual Studio 2008 : How to I deploy a Visual Studio 2008 Web Application to SharePoint Server 2007 ). Which one of my questions met the need for it to be an application page (_layouts)?