I'm attempting to install Team Foundation Server 2008 on a Windows Server 2003 instance that exists under Hyper-V. The SQL Server database itself is held on the root partition of the Hyper-V server and has the Reporting Services installed (so I've solved the TF220059 error already).

After hitting "Next >" after typing the name of the SQL Server I get this error:

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Microsoft Visual Studio 2008 Team Foundation Server Setup
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TF220056: An unrecoverable error occurred while trying to check the status of the Team Foundation database.

Installation cannot continue.  Check the install log for more details.
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OK   
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The error log's stack trace makes it look like a bug in the TFS installer itself:

[03/22/10,19:14:42] TFSUI: [2] tfsdb.exe: System.IO.IOException: The directory name is invalid.
[03/22/10,19:14:42] TFSUI: [2] tfsdb.exe:    at System.IO.__Error.WinIOError(Int32 errorCode, String maybeFullPath)
[03/22/10,19:14:42] TFSUI: [2] tfsdb.exe:    at System.IO.__Error.WinIOError()
[03/22/10,19:14:43] TFSUI: [2] tfsdb.exe:    at System.IO.Path.GetTempFileName()
[03/22/10,19:14:43] TFSUI: [2] tfsdb.exe:    at Microsoft.TeamFoundation.DatabaseInstaller.CommandLine.Commands.InstallerCommand.get_Log()
[03/22/10,19:14:43] TFSUI: [2] tfsdb.exe:    at Microsoft.TeamFoundation.DatabaseInstaller.CommandLine.Commands.InstallerCommand.Run()
[03/22/10,19:14:43] TFSUI: [2] tfsdb.exe:    at Microsoft.TeamFoundation.DatabaseInstaller.CommandLine.CommandLine.RunCommand(String[] args)
[03/22/10,19:14:43] TFSUI: [2] tfsdb.exe: The directory name is invalid.
[03/22/10,19:14:43] TFSUI: [2] tfsdb.exe check failed with error code: 100

I'm running the installer as the domain Administrator, although the server is a Terminal Server in Application Mode, might that be the cause of the problems?