It means .NET 3.5 framework is not enabled on your laptop. Every windows 7 laptop is pre-installed with it.
How to enable:
1.Open Control Panel
2.Click on ‘Programs’.
3. Click “Turn windows feature on or off “.
4. Select the checkboxes in “Microsoft .Net Framework 3.5.1” and press OK.
5. Close everything & run mHotspot now, it should work fine.
If you are using Windows 8, download and install the .NET 3.5 from here: FileHippo