It sounds to me like your host needs to take their own advice and resolve the issues they have with .NET 3.5 SP1. mojoPortal requires SP1 and modifying the code to make it work without it is probably close to impossible. There are too many parts of the system that rely on features of SP1. It has been out for over a year so I would expect any host that is worth your time to have it running on their Windows Web Servers.
Personally, I suggest you find a new host that updates their servers on a regular basis. You can check out the Hosting Page for information on hosts that work well with mojoPortal. You could also ask your host if they have Linux Web Servers which support Mono. If so, mojoPortal runs great with Mono so that might solve your problem.
In what way does the mojoPortal code reference AJAX that is incorrect?