For my setup, I am going to start with a VPC running Windows server 2008. There are multiple scenarios for installing Team Foundation Server depending on your needs, but for the purpose of using this to demo the functionality of VSTS I will do a Single-Server Installation (TFS, SQL, and SQL Server Reporting Services (SSRS) all reside on once machine). For more information on the various scenarios, please refer to the TFSInstall guide available on the ISO image. Here is what I did.
1. Download the Visual Studio Team System 2010 Team Foundation Server Beta 1 http://www.microsoft.com/downloads/details.aspx?familyid=58665C27-7023-4A50-B31D-C39CD86A415F&displaylang=en
2. Download a 180-day trial of SQL Server 2008 Enterprise edition http://www.microsoft.com/sqlserver/2008/en/us/trial-software.aspx
3. Login to the machine, and setup a user Account – create a standard user account with a password. If you are using server 2008, this will be under Control Panel à User Accounts à Manage another account à Create new account. This user willo be used during the TFS install. Please refer to the TFSInstall guide for more information on how many users you need and thier security level based on your install scenario.
4. Install IIS, make sure IIS 6 Management Compatibility is installed, and make sure Windows Authentication is installed. You can do this from the Control Panel à Programs and Features à Turn Windows features on or off. If you are using server 2008, this will start up the Server Manager screen. You can install the features above under Roles à Web Server (IIS)
5. Install the .NET framework (required for SQL Server 08 – the TFS installer will install .NET 4.0 Beta, but install 3.5 for now)
6. Install windows installer 4.5
7. Install SQL Server 2008 – Make sure you install Reporting Services so you can use the default installation of TFS
8. Make sure you enable TCP/IP for SQL server (Start à All Programs à Microsoft SQL Server 2008 à Configuration Tools à SQL Server Configuration Manager à SQL Server Network Configuration à Protocols for <SERVERNAME> à Enable TCP/IP [Right click, enable])
9. Make sure you start the SQL Server Agent (Start à All Programs à Microsoft SQL Server 2008 à Configuration Tools à SQL Server Services à SQL Server Agent à Start the service [Right click, start]). This service to be automatic if it isn’t
10. Install TFS using the default configuration. Once you pass the Readiness Checks, click Configure and wait for the installed to finish configuring the server. The server may detect errors during the readiness check. You have to resolve any errors before you can proceed. The steps above cover the majority of the prerequisites so you should have to do much debugging before you finalize the configuration process.

11. Once you are done. Click next to finish, then click close. You have successfully installed and configured the Team Foundation Application Server.

12. Next we will configure the Team Build Server.

13. Using the start menu, navigate to the Team Foundation Administration Consol. Expand the TFS server, and click on the Application Tier. Take note of the Uri. You will need this to finalize the Team Build configuration.
14. Going back to the Team Foundation Server Configuration screen above, select Team Build Configuration and click on Start Wizard. Click Browse à Servers à Add… à and type in the Uri from step 13.

15. Click Ok à Close à Connect, and you are done! You can manage the Team Foundation Build and the Server anytime from the Team Foundation Administration Consol accessible through the start menu.