Today I tried to install Visual Studo 2005 SP1 and had some setup issues.
I hope this guide will help you as a reference of what to do:
1) Remove SP beta - Activate show updates in add-remove programs.
Don't forget to have your original VS.Net installation medium available!!!
2) Unistall the Web Application Project, since it is built-in to SP1
3) The following error is normal:
The installation of C:\DOCUME~1\ADMINI~1\LOCALS~1\Temp\ZNW442\VS80sp1-KB926601-X86-ENU.msp is not permitted due to an error in software restriction policy processing. The object cannot be trusted.
i) Open Administrative Tools
ii) Open Local Security Policy
iii) Select Software Restriction Policies
iv) If no software restrictions are defined, right click the Software Restriction Policies node and select New Software Restriction Policy
v) Double click Enforcement and select "All users except local administrators"
vi) Click OK
vii) Reboot the machine
More information on Heath Stewart's Blog
To learn more about Visual Studio SP1 visit Development Catharsis