Installations required to be followed in sequence.
1. Install IIS.
2. Visual Studio Team System 2008
3. VSTS 2008 Team Explorer
4. VSTS 2008 SP1
5. SQL Server 2005 (or 2008) (Also if you are working with Service Packs of SQL you can subsequently install that too)
6. VSTS Power Tools (If required)
If you installed Team Explorer into Visual Studio after you applied Visual Studio 2008 Service Pack 1, you’ll need to re-apply the service pack. If you don’t, then you’ll be running an unsupported “mixed mode” installation, meaning the core Visual Studio components will be at the SP1 servicing level and TE will be at the RTM servicing level.