I don't understand the integration model for VS 2008 here. I have VS 2008 Pro that comes bundled with SQL Server 2005, but when I 'Add New Item' -> 'Service-based Database', it gives me an error saying SQL Server is not setup properly. Clicking on the help button redirects me to this page. Which explains that I have to have SQLServer 2005 Express for this to work properly.... Why? This is utterly non-sense to me.

For info, I've tried setting up VS 2008 in Tools->Options->Database Tools->Data Connections->SQL Server Instance Name with various combinations without luck. I even checked the appropriate value using the server explorer and SQL Server Management Studio.