The method that works best is to have 2 folders (eg C:\WINDOWS.V1 and C:\WINDOWS.V2) and rename the required version as C:\WINDOWS. This system uses the same MSDOS.SYS, CONFIG.SYS and AUTOEXEC.BAT for all versions.
Here's how to do it:
1.Install Win95 version 1 to C:\WINDOWS
2.Rename the Windows folder to C:\WINDOWS.V1 (use the MOVE command)
3.Install Win95 version 2 to C:\WINDOWS (or copy version 1)
4.Now use the following BATch files to switch between them:
V1WIN.BAT
C:
CD \
MOVE WINDOWS WINDOWS.V2
C:\WINDOWS.V2\COMMAND\MOVE WINDOWS.V1 WINDOWS
V2WIN.BAT
C:
CD \
MOVE WINDOWS WINDOWS.V1
C:\WINDOWS.V1\COMMAND\MOVE WINDOWS.V2 WINDOWS
After running the BATch file, just reboot your PC to load the required version. If you accidentally run the wrong BATch file you will see some error messages but no damage will be done.
You could extend this system if you want to have more than two versions of Win95 installed and have lots of disk space. Amending the BATch files is left as an exercise for the reader!