Have been having a few problems installing Visual Studio 2005 Standard Edition Beta 2 on my Longhorn/Vista machine - the installer would fail after telling me it was about to install MSXML6.
I found my own workaround quickly which was to install the thing manually - it's in <DVD Drive>\msdn\MSXML if you're interested) - after that the installation went smoothly, for me anyway!
If you continue to have problems, the recommendation as noted by http://blogs.msdn.com/quanto/archive/2005/08/02/446689.aspx seems to be to install the .NET Compact Frameworks and SQL Server 2005 Mobile Edition manually.