Hi,
Installing Visual Studio 2008 will install SQL Server 2005 Express if you select all features. Applying SQL Server 2005 SP3 will upgrade your SQL Express and Developer instances to SP3. If you don't need SQL Server 2005 Express, uninstall and then apply SQL Server 2005 SP3, that should be succeeded.
Any more questions, please feel free to let us know.
ChunSong Feng
Microsoft Online Community Support
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