Another common error which can happen when installing this is,
Error 1718. File FileName was rejected by digital signature policy.
This error is due to the Software Restriction Policies (also known as SAFER) that exist in the operating systems that came after Windows XP. This was introduced to help users avoid running unsafer files. SAFER will be used by Windows Installer to check the file signatures to confirm that the files were not tampered. Note that this error can happen when installing any large Windows installer package or Windows installer patch.
This error occurs when there is no contiguous piece of virtual memory to accommodate the file. Then the Windows installer will fail to validate the file and result in this error.
There are few things you can do to fix this,
1. You can edit the registry to make the PolicyScope value to 1 before you install the package.
2. By changing the SAFER settings to allow administrators to install the package.
3. Installing the hotfix if you are running Windows 2003,
For any of this you can get more information from Microsoft by visiting
http://support.microsoft.com/?kbid=925336.
Apart from that Visual Studio SP1 release note can be found at
http://support.microsoft.com/?kbid=928957.
Also I suggest that you refer Heath Stewart’s articles for more installation tips. Heath is Technical Lead working at Microsoft
http://blogs.msdn.com/heaths/archive/tags/VS+2005+SP1/default.aspx.
Even though I had no luck recovering the applications without formatting the system which crashed with the failed installation of Visual Studio SP1, I guess you will have much more luck after reading these articles.