Yes, you can do this, but do it in this order:

STEP 1: "Turn on" IIS 7 and the IIS 6 Compatibility mode:

Control Panel –> Programs and Features –> Click the Turn Windows Features on or off link in the left margin.

Expand Internet Information Services –> Web Management Tools and turn on:

  • IIS 6 Management Compatibility
  • IIS Management Console

Expand Internet Information Services –> World Wide Web Services and turn on:

  • Application Development Features
      • .NET Extensibility
      • ASP.NET
  • Common HTTP Features (not sure if these are needed but I turned them on anyway)
  • Health and Diagnostics
    • ODBC Logging (not needed, but I thought this would be a potentially useful log)

STEP 2: Install SQL 2005 "as Administrator"

The installation will go smoothly as long as the pre-requisites check is OK (on my PC after doing step 1 everything passed the check).  For some reason however, if you tell it to start the SQL Server agent, later in the installation process you’ll have to stop the SQL Agent to be able to continue setup, but it will tell you that as part of the installation.

After you’re done that, the product will be installed and working.

Microsoft’s web site suggests that you should also install SQL Server 2005 SP2 (CTP) — but I’m holding off for the release code version of it.