I realize this is an old thread, but I just wanted to add a couple of things. This is the second cluster where we have run into this same issue. The first one we ended up rebuilding, so here is what we have learned:
1. You will need to slipstream SP1 into the SQL 2008 install. For those of you, like me, who don't follow the cliff notes well on creating a slipstreamed install, here is a more thorough post on creating one:
2. If you have a hosed SQL 2008 install on a cluster, you will need to uninstall it first. Some of the directions out there indicate you will need to hack the registry to do this. That is how we ended up rebuilding the first cluster!
Actually all you need to do is uninstall the cluster. To uninstall a cluster, you remove the passive node(s) first by using the setup disk. Go to Maintenance->Uninstall Cluster Node. Then you will need to reboot. Next go to Add/Remove Programs and uninstall what is left of SQL Server. You may need to do this more than once to get all the litter off. You'll need to reboot again. Follow the same steps on the active node(s).
With the hosed installation, we also had to go to the cluster "Services and Applications", right click on SQL and delete it. This worked and we were able to successfully install SQL 2008 slipstreamed with SP1 after uninstalling the unsuccessful attempt.
Here are a couple of links on uninstalling a cluster:
Hope that helps!