The Windows Phone Developer Tools are not officially supported on operating systems other than Windows Vista or Windows 7.  In between the CTP and the CTP Refresh, a block was added to setup to prevent installing on Windows Server 2008 to help enforce this support limitation.  I’ve heard from some folks who were using the original CTP on Windows Server 2008 who cannot move forward to the CTP Refresh or the final release because of this block.

There is a way you can work around the Windows Server 2008 setup block if needed.  Please note that this is not officially supported, so if you try these steps, you are doing so at your own risk.

1. Download the Windows Phone Developer Tools web bootstrapper and save it to your hard drive
2. Extract the contents of the setup package by running vm_web.exe /x and choosing a path to extract to
3. Go to the folder you extracted to in step 2 and open the file baseline.dat in notepad
4. Look for the section named [gencomp7788]
   
   Note - you have to change this exact section - this is the one that controls the OS version blocking behavior in Windows Phone Developer Tools setup.
5. Change the value InstallOnLHS from 1 to 0
6. Change the value InstallOnWin7Server from 1 to 0
7. Save and close baseline.dat
8. Run setup.exe /web from the folder you extracted to in step 2
   
   Note - please make sure that you include the /web command line parameter in step 8.  If you don't, setup will not attempt to download the packages it needs to install, and it will fail to install correctly as a result.