I was trying to install Orcas VSTS Beta 1 on a Vista x32 machine and the setup failed as shown in the screen shot below and the logs were not very helpful either.
[05/16/07,06:13:16] Microsoft .NET Framework v3.5: [2] Error code 87 for this component means “The parameter is incorrect.”
[05/16/07,06:13:16] Microsoft .NET Framework v3.5: [2] Setup Failed on component Microsoft .NET Framework v3.5
[05/16/07,06:13:18] VS70pgui: [2] DepCheck indicates Microsoft .NET Framework v3.5 is not installed.
[05/16/07,06:13:18] VS70pgui: [2] DepCheck indicates Microsoft Document Explorer 2007 was not attempted to be installed.
[05/16/07,06:13:18] VS70pgui: [2] DepCheck indicates Microsoft Visual Studio Codename Orcas Team Suite - ENU was not attempted to be installed.
[05/16/07,06:13:18] VS70pgui: [2] DepCheck indicates Microsoft .NET Compact Framework 2.0 SP2 was not attempted to be installed.
[05/16/07,06:13:18] VS70pgui: [2] DepCheck indicates Microsoft .NET Compact Framework 3.5 was not attempted to be installed.
[05/16/07,06:13:18] VS70pgui: [2] DepCheck indicates Microsoft Visual Studio Codename Orcas Tools for Office Runtime was not attempted to be installed.
[05/16/07,06:13:19] VS70pgui: [2] DepCheck indicates Microsoft Visual Studio 2005 Tools for the 2007 Microsoft Office System Runtime was not attempted to be installed.
[05/16/07,06:13:19] VS70pgui: [2] DepCheck indicates Microsoft SQL Server Compact Edition 3.5 was not attempted to be installed.
[05/16/07,06:13:19] VS70pgui: [2] DepCheck indicates Microsoft SQL Server Compact Edition 3.5 Design Tools was not attempted to be installed.
[05/16/07,06:13:19] VS70pgui: [2] DepCheck indicates Microsoft SQL Server Compact Edition 3.5 For Devices was not attempted to be installed.
[05/16/07,06:13:19] VS70pgui: [2] DepCheck indicates Windows Mobile 5.0 SDK R2 for Pocket PC was not attempted to be installed.
[05/16/07,06:13:19] VS70pgui: [2] DepCheck indicates Windows Mobile 5.0 SDK R2 for Smartphone was not attempted to be installed.
[05/16/07,06:13:19] VS70pgui: [2] DepCheck indicates Microsoft Device Emulator version 3.0 was not attempted to be installed.
[05/16/07,06:13:20] VS70pgui: [2] DepCheck indicates Microsoft .NET Framework 2.0 SDK was not attempted to be installed.
[05/16/07,06:13:20] VS70pgui: [2] DepCheck indicates Microsoft Visual Studio Asset System was not attempted to be installed.
[05/16/07,06:13:20] VS70pgui: [2] DepCheck indicates Windows SDK Tools (X86) was not attempted to be installed.
[05/16/07,06:13:20] VS70pgui: [2] DepCheck indicates Windows SDK Headers and Libraries (X86) was not attempted to be installed.
[05/16/07,06:13:20] VS70pgui: [2] DepCheck indicates Windows SDK Win32 Tools (X86) was not attempted to be installed.
[05/16/07,06:13:20] VS70pgui: [2] DepCheck indicates Windows SDK NetFx Tools (X86) was not attempted to be installed.
[05/16/07,06:13:21] VS70pgui: [2] DepCheck indicates Microsoft Visual Studio Performance Collection Tools (x86) was not attempted to be installed.
[05/16/07,06:13:21] VS70pgui: [2] DepCheck indicates Crystal Reports was not attempted to be installed.
After digging around a bit it turns out the installer could not install the .NET Framework. So to get around this you need to install the .NET v3.5 manually and this can be found in {your Orcas location}\WCU\dotNetFramework\dotNetFX35\ and then the appropriate platform (x86 or x64).
There are a few more options as detailed by Kripura , however I have not tried them so not sure which will work or not.