Have you installed Visual Studio 2008 Team Developer Edition SP1? Trying to install the Visual Studio 2008 SDK 1.1 and getting this error message?

You must have Microsoft Visual Studio 2008 SP1 Standard Edition or above installed on your computer before proceeding.

There is an answer: unpack the installer package and then run the MSI directly. Run the install package

Vssdk_sfx.exe /x

and then provide a directory to put the content. You’ll need to run the MSI from an elevated command prompt in Vista and Windows 7.