I have the same problem, and nothing seems to help (format C: might do the job). I haven't found a solution yet, but have an idea that the problem comes from a earlier installation of a C# express Beta version, which I belive I have uninstalled correctly, but maybe something isn't removed in registry.
I have tryed uninstall of all related products, deleting all related files related to Visual Studio 8 and the same in registry under software and then reinstalled but still with no luck.
Maybe somebody found a cure?
Benny
Added:
I found a cure. Uninstall all Visual Studio related products and run the program vs2005_beta_cleanup_tool.exe to clean the computer from beta stuff and then reinstall Visual Studio. That solved the problem and another problem with packaged that couldn't be loaded.