What do you mean that you "have tried both .net 2.0 and .net3.5 assemblies" ?
If you are using Visual Studio 2008 you use Net 3.5 comonents, and you must make sure every Gizmox DLL in your project is from that version, otherwise you will have problems. Same goes for if you are using Visual Studio 2005, then you use .net 2.0 Gizmox DLL's.
You do not have to install anything special on the server running IIS, except for Microsoft .NET. Version 2 of MS.NET will be needed. All the Gizmox DLL's required for your app should be on the bin folder of your application, and are not required to be in the GAC of the server. You must make sure you have all of them there.
I see by the error, that your "add verb" line from web.config indicates that you are currently using Gizmox NET3.5, and then you must make sure your web.config line in the <configsections> references the same version like this:
<section name="WebGUI" type="Gizmox.WebGUI.Common.Configuration.ConfigHandler, Gizmox.WebGUI.Common, Version=3.0.5701.0, Culture=neutral, PublicKeyToken=263fa4ef694acff6" />
Usually the error you get indicates a missing or wrong DLL. I recommend you open your project, remove the bin folder, make sure you have all the Gizmox DLL's with Copy Local = True, then recompile your project. After that you should copy the contents of your bin folder from your project's bin folder to your server app's bin folder and try again.