There is an issue upgrading .NET 4.0 from Beta1 to Beta2 only on Vista RTM and SP1 as well as Windows Server 2008 SP1. This is due to a known issue that was fixed in Vista SP2, Win7, and Windows Server 2008 R2. It is not an issue on XP.

There is a document available here for how you avoid the problem and directions for how to recover if you are already in a bad state.