Not sure if this will help in your situation; however, I was having much grief with this issue and I eventually alleviated the problem by breaking down the updates into...
Did you ever find solution to this problem.. we have the same..... catch 22 is that the model is in a 'restoring state' and sQL server needs the model...
I'm having the identical problem as well. In fact, the memory quota values are quite similar..... estimate(3413MB) exceeds the available system memory(1331MB).
Oh! Forgot to mention that I installed SQL2005 Developer edition on another machine as well as the licensed VS2005 product and the BI templates are available and work...
I drilled down into the folder mentioned and under DataTransformationProject found a file "DataTransformationProjectItems.vsdir as well as a folder "DataTransformationItems" within the DataTransformationItems folder exists...
Did you every find out what happened to the missing templates? I have the Orcas beta 3.5 VS installed locally and then installed SQL2005 Standard edition with...