For those of us running Windows Server 2008 as a workstation , here is another shocking gaffe! Live Mesh requires XP or Vista (32/64 bit). No luck for us Windows Server 2008 users.
Hopefully someone has hacked the installer to let it run on Windows Server 2008
If this doesn’t work, VMware is the only option. Here is a request to VMWare. How about modifying Fusion to let Windows run seamlessly within Windows ? Then we can have XP installed on Win Server 2008 and share folders between the host and the VM
Update: MsftGuy has a fix here
http://msftguy.blogspot.com/2008/06/befriending-live-mesh-and-server-2008.html

May 7, 2008 at 7:43 pm
[...] Darren Murph wrote an interesting post today onHere’s a quick excerptIf this doesn’t work, VMware is the only option. Here is a request to VMWare. How about modifying Fusion to let Windows run seamlessly within Windows ? Then we can have XP installed on Win Server 2008 and share folders between the host … [...]
May 19, 2008 at 1:48 am
I have also been stymied by this bizarre problem. I can only assume MS is planning to fully support the server OS’s but has just not tested it (hey it’s still a CTP). Not being able to put a server on the mesh is simply a deal-breaker.
June 19, 2008 at 9:06 am
You can use ‘-Force’ command line option to skip the OS version check.