I just finished installing SP1 for .NET 3.5 and VS2008. I thought I would share the hoops I had to jump through in the event it saves you some time. Actually the process wasn't too painful. Be careful to remain patient during the install process though - the installers churned VERY SLOWLY on my machine, but eventually I had a successful install.
There were only a few "odd" things I had to do to get the install to work properly...
Our friends at Microsoft were very nice in providing a patch removal tool. This is much better than having a doc that you have to go step-by-step to get your maching the the appropriate state. Kudos to whoever's idea this was.
My only real issue was that the Patch Removal tool and the VS2008 installer kept complaining about Windows Explorer and the Machine Debug Manager being open. Since I started the install after a reboot with no programs open the Windows Explorer puzzled me for a while. It reported a process ID, but there was no match in Task Manager. In the end I realized that I had Dave's Quick Search bar running. After disabling this tool and stopping the Machine Debug Manager process (which restarted automatically after reboot) everything worked like a champ.
On the lists I am on I am hearing that some people run into needing the original media and others do not. I ended up needing to access the original Visual Studio install media. I work remote, so I had to work with my IS support people to get the media mounted and available on the VPN so I could access it. So I guess the moral of the story is to make sure you have access to the media one way or another before you begin.
Other than that, all went well!