Logged here for my future reference. See below service packs required for Windows Server 2008 R2 with Visual Studio 2010.
Be warned Windows Server SP1 is 903MB and even though the Visual Studio SP1 installer is 795KB it still needs to suck down 393MB as part of the install. I also made sure I applied all windows updates before applying the service packs. I had something like 81 updates to apply.