We received several bugs and I saw a bunch of newsgroup posts about this one.

Due to a performance bug in longhorn in the OS file system, CreateProcess is failing intermittently.  Normally, you'll see MSXML6 or one of the optional components fail during installation.

The workaround is to install the components manually before running VS setup.  The components are under the \wcu folder.

We recommend manually installing the following:

  • MSXML6 (under \wcu\msxml)
  • .NET Compact Framework V1 (under \wcu\netcf) 
  • .NET Compact Framework V2  (under \wcu\netcf)
  • SQL Server 2005 Mobile Edition (under \wcu\sqlce)

Once those are installed, run the vs setup and things should install smoothly.