.NET 3.5 SP1 breaks SQL Server 2008 (CTP5 Management Studio SQL)

I installed .NET 3.5 SP1 and Visual Studio 2008 SP1 beta just to find out that my SQL Server 2008 ((CTP5 Management Studio SQL)) doesn't work any more. Instead it displays "The Tabular Data Stream (TDS) version 0x730b0003 of the client library used to open the connection is unsupported or unknown. The connection has been closed." error message when I try to connect to a SQL Server. Searching on Google didn't help much.