Recently, we began the install of a new instance on a VMware Host and ran into an issue with a problematic outdated ISO file. Therefore, those of you embarking on new SQL 2008 installs, please avoid a potential headache, as personally exposed to (and like these guys lived through also), by simply downloading the latest ISO media/image. The following is simply an anecdote of frustration.

Our headaches began upon mounting the [outdated] SQL 2008 ISO on a Windows Server 2008 host.  Once we selected the CD/DVD drive, the pop-up/dialogue box error occurs after invoking the Setup.exe:

Microsoft .Net framework 3.5 install has failed

SQL Server 2008 setup requires .Net framework 3.5 to be installed 

I proceeded to verify directly under programs and features what version of .Net Framework was installed - sure enough 3.5, and even SP1 was the current level installed, therefore I tried a couple of more things (not knowing that simply downloading the new media was the solution):  repaired the 3.5 SP1 installation, then removed it after seeing the same error above upon invoking Setup.exe...  I even went as far as grabbing the non SP1 Dot Net Framework via download to see if that would enable the install to proceed; it didn't make a difference.

You can use this Dot Net Framework Verifier if you are in doubt as to whether your .Net version is okay.