Warning:

Setting up the TFS is not an easy task. In our environment we have the Reporting Services and WSS installed on the TFS server. The TFS and SharePoint databases are on a separate SQL Server. Reporting Services databases are locally stored.

If you now try to install the SP1, it will reconfigure your Reporting Services so that the databases are on the remote SQL Server. Of course that won't work! So the upgrade fails with an error

Returning IDOK. INSTALLMESSAGE_ERROR [Error 29112.Team Foundation Report Server Configuration: Either SQL Reporting Services is not properly configured, or the Reporting Services Web site could not be reached. Use the Reporting Services Configuration tool to confirm that SQL Reporting Services is configured properly and that the Reporting Service Web site can be reached, and then run the installation again. For more information, see the Team Foundation Installation Guide.]

So what. We will continue with RTM and without the SP1. At least I was thinking that way. Well, obviously the TFS did otherwise. The TFS was completely offline!

To fix the problem I had to do a repair installation through Add/Remove Software. During that process I had 4 or 5 warning that the Reporting Services are not configured, because the database server was changed again to the remote SQL Server! But you can reconfigure the Reporting Services to use the local databases and then continue the wizard.

To be short: If you have a non default installation of your Team Foundation Server 2008, think carefully about applying the SP1.