this server version is not supported. you must have microsoft sql server 2005 beta 2 or later

Microsoft Visual Studio 2005 Service Pack 1 Update for Microsoft SQL Server 2008 Support

Brief Description

This update enables developers to use Microsoft Visual Studio 2005 Service Pack 1 with Microsoft SQL Server 2008.

Download & Install it:

http://www.microsoft.com/downloads/details.aspx?FamilyID=E1109AEF-1AA2-408D-AA0F-9DF094F993BF&displaylang=en