I just installed VS 2005 SP1. In order to distribute the CRT, etc., I've included vcredist_x86.exe in my installer and set it to run before exit. This worked fine with the pre-SP1 redistributable.
The problem is that with the SP1 redistributable, vcredist_x86.exe locks up when it's called from my installer. It never completes and must be closed via Task Manager (the offending process is msiexec.exe). Running it via Explorer works fine.