I never really know what order is the best installation or if it even matters, but should you install sql server (2008 in this case) first and then Visual Studio or vice versa or does it not matter?
install visual studio first but don't allow it to install sql server express because it is going to install sql server 2005 express then apply visual studio sp1, then install sql server 2008 then sql 2008 sp1 if you want
It doesn't really matter, since Visual Studio 2008 RTM does not support SQL Server 2008. You have to install Visual Studio 2008 SP1 to get SQL Server 2008 support, so that's the time you need SQL Server installed.
I always prefer to start with SQL Server. This way when installing Visual Studio I don't have to deal with the request to install SQL Express. Also I find that the process of installing SQL Server is much more heavy. But I guess it's prety subjective a choice.
If you want to use Business Intelligence Developer Studio (BIDS) within Visual Studio, then definately Visual Studio 2008 first, then VS 2008 Service Pack 1, and SQL Server Developer Edition last.
If you're using SQL Express 2008, it's recommended to do this the same way, for SQL 2005 it doesn't matter much.
The reason is that Visual Studio 2008 RTM does not know about SQL 2008. (In that time, SQL 2008 wasn't released yet.) When SQL 2008 was released, a service pack for .Net 3.5 (SP1) and a service pack for Visual Studio 2008 (also SP1) was released to make everything compatible.
Hope this helps.