Apparently SQL Server Mobile Edition is now going to be called SQL Server Everywhere Edition because, well, it is supposed to run everywhere (including the desktop).  From what I can tell, it doesn’t require any kind of an install and is DLL based instead of Service based.

I am not sure on the timetable for it’s release, but I am guessing that it will be released with SQL Server 2005 Service Pack 1.

http://pluralsight.com/blogs/jimw/archive/2006/04/06/21167.aspx
http://www.microsoft.com/sql/letter.mspx

Here is a nice FAQ that was posted:

http://blogs.msdn.com/stevelasker/archive/2006/04/10/SqlEverywhereInfo.aspx

Info about how to use SQL/e with current VS.NET 2005 bits:

http://blogs.msdn.com/smartclientdata/archive/2005/07/15/439008.aspx