Same problem, but just re-installing SQL Management Studio 2008 R2 Service Pack 1 worked for me. I left my DB engine alone. The DB engine is not the problem, just SQL Management Studio getting hosed by Visual Studio SP1.
Installers here...
http://www.microsoft.com/download/en/details.aspx?displaylang=en&id=26727
I installed SQLManagementStudio_x86_ENU.exe (32 bit for my machine).