If you are getting ready to migrate your applications to Windows Phone,
you have to install all the neccesary Windows Phone Stuff.
However you might have incompatibilities in your dev machine.
This post: http://blogs.msdn.com/b/astebner/archive/2010/07/12/10037442.aspx
Is great. I used it to identity why the installation tool insisted that
I had a Windows Phone Emulator installed in my machine. It seems that it looked for something like XDE.
So if you have this same issue or something similar just take a look at that post, it might be of great help