Need to up install SP1 for VS 2008 to get support for SQL Server 2008
Also, if using the web download tool from Microsoft, it may install the 64bit version (a problem if
you use 32bit os!!). In which case, and error message of: Connections to SQL Server files (*.mdf) require SQL Server Express 2005 to function properly,
appears. To work around this problem, uninstall the 64-bit version of SQL Server Express 2008, and then install the 32-bit version of SQL Server Express 2008
(great advice from the kb on this this article