I was not able to install SQL Server 2008 R2 for a while. I tried this in various environments like Virtual PC (VPC), VMWare with Windows 2008 with and without service packs, but was failing.
While installing it gave me a error saying there is some issue with this package and it continued to installed. At the end of installation, it is saying all the services except analysis service failed to installed. That is, it has failed to installed Database services, Replication and Reporting services and it will successfully installed all the client components.
All the while, I was running the ISO file (en_sql_server_2008_r2_developer_x86_x64_ia64_dvd_522665.iso)which I downloaded from MSDN.
At last I extracted the ISO file into a folder and executed the setup.exe from there. Guess what, it worked.