I am developing a software application that is targeted towards
consumer and can also be useful in a group setting (very small
differences in code when used in multi user mode). In a single user
mode user will install the application on their desktop and use. In
group setting it will be installed on one of the desktop / server and
can be used by the group as a web application (no installation on
other desktops other than one main pc/server)

>> I want to develop and manage a single code base but be able to
deploy in two modes ? single user and mutli-user mode.

>> What software development tool / technology (front end and logic)
can I use so that the same code base application can run as a
standalone application or as the web application? As this application
will be deployed via web, I want to keep the install package size to
minimum. Is it possible in Visual Studio.net? Also, give me names of
other tools, commercial or freeware.

If I understand right, you are looking to create a web application.
For a web application you can use php, asp, or jsp to create an
application. You will need a web server installed on the
computer/server you keep your code (IIS or Tomcat can do that job).
You can also use Visual Studio.net (to create aspx pages). Personally
I find Visual Studio.net much easier and user friendly but needs
developer licensing. But asp, jsp, and php can do that if you can
handle programming and want to keep development cost low.

If you decide to go with jsp you will need to download apache software as well.

Hope that helps.

Look into using Ruby on Rails.

It is a web framework, however, you would be able to re-use the MODEL
classes within a normal Ruby application and use the TK framework for
the standalong gui side.

Tight integration with AJAX libraries will ensure that there is little
"gap" in function between the standalone and web app.