You can download the bits here.
Also, check out this post for more info on creating WP7 apps by the Windows Team.
Supported Operating System
- Windows® Vista® (x86 and x64) ENU with Service Pack 2 – all editions except Starter Edition
- Windows 7 (x86 and x64) ENU – all editions except Starter Edition
- Installation requires 3 GB of free disk space on the system drive.
- 2 GB RAM
- XNA® Game Studio deployment to Windows® Phone Emulator requires a DirectX® 10 or later graphics card with WDDM 1.1 driver. For additional information, see item #1 in Windows Phone Deployment and Debugging in XNA Game Studio.
- DirectX 10 capable card with a WDDM 1.1 driver is needed to take advantage of GPU acceleration on the Windows Phone Emulator for a Silverlight® application. The DX10 card is optional for Silverlight applications.