I've seen a few failures with MSXML6 on machines with Beta 1 bits on it which weren't fully cleaned up.
If you run into this, first, try using the Beta Clean up tool at:
If you're still encountering the issue, try the following workaround:
1. cd c:\windows\system32
2. rename msvcr80.dll msvcr80.dll.old
3. Run wcu\MSXML\msxml6.msi. It installed fine.
4. rename msvcr80.dll.old msvcr80.dll
5. Run setup.exe to install VSTS 2005.