How to fix Application Data folder error when launching Visual Studio 2005 on Windows Vista & Window 7

I have heard of a few instances recently where customers have installed Visual Studio 2005 on Windows Vista and Window 7, and then every time they tried to launch Visual Studio, they received an error dialog with the following text:

The Application Data folder for Visual Studio could not be created.

This error dialog only has an OK button and clicking OK closes Visual Studio and the IDE cannot be used.

I know that this is an application compatibility warning that appears when launching
Visual Studio 2005 on Windows Vista.  This warning dialog appears when
attempting to launch Visual Studio 2005 on Windows Vista.

Unfortunately,
the same dialog also appears during Visual Studio 2005 setup.  If you
press cancel on this dialog when it appears during setup, it can cause
some of the necessary registration steps to be skipped.

If you
see this Application Data folder error dialog when launching Visual
Studio 2005 on Windows Vista, there is a chance that you inadvertantly
pressed cancel on this application compatibility dialog when it
appeared during Visual Studio 2005 setup.  You can use the following
steps to repair the Visual Studio registration on your system and
resolve this error:

  1. Click on the Start menu, choose All Programs, then Accessories
  2. Right-click on the item named Command Prompt and choose Run as administrator
  3. Click continue to launch an elevated command prompt
  4. Run "%programfiles%\Microsoft Visual Studio 8\Common7\IDE\devenv.exe" /setup

Note:
the command line in step 4 assumes that you have installed Visual
Studio 2005 to the default path on an x86 system.  You will need to
update the command line if your system is not an x86 system or if you
installed Visual Studio 2005 to a non-default path.

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