I'd rather not install the entire VS 2008 installation given that I'm not going to be using anything other than the compiler. Will VS 2010's multitargeting work correctly using only the Platform SDK instead of the full VS2008 install?
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2The custom setup options are not nearly fine-grained enough to allow you to leave the big chunks like the IDE out. It isn't just the SDK that's used, at least the VC subdirectory needs to be there. And bits of Common7, also the folder that contains the IDE. Rename the folders, delete them later if it works out.
You can directly call the .net 3.5 MSBuild from command line by digging it out of the frameworks folder within windows. I am not certain if you could repoint Visual Studio at a different copy though. More importantly, unless you have found a bug, the copy of MSBuild included in the .Net 4 framework should properly build a project targeting the 3.5 framework. So you might be jumping through some unnecessary hoops in the first place.