I downloaded and ran the beta files but my version in VS2008SP1 says 1.6.5.0.  Are there other steps i need to take.  i am running on 32bit Vista Ultimate.

Ok - deleted files from GAC and reran install-> now, no files in the GAC.  any other suggestions?  i know this is a permissions issue just don't know exactly what.  my login is in the administrators group.

Well, the install actually calls the gacutil /f command on the assemblies.  So it would seem, like you said, to be a permissions issue.  Can you right-click the intsall and then click Run As Administrator?  I would be curious to see if you have the same results.  Also, jsut for grins, do you have a laptop or another machine that you can load on just for comparision and as a test?

Ran install as administrator and did not work.  i will keep fusing with it.

Let me know if you don't make any progress soon and we can go from there.