Towards the end of the installation process, one dialog pops up where you have to address the issue or the "next" button will be deactivated. On this process, you will either have a "failed" button, a "warning" button, or a "pass"/ "Not applicable" button. Once you resolve the issue you rerun to validate and the installation process is complete.

The problem with mine says something like, "your machine has older version of windows visual studio and is not compatiable.......... only made for ENUs.............something like that (I could not remember)". Upon googling some gurus suggested installing SP 1. ISO. However, it didn't work. What shall I do to resolve the issue. This is what programs I have on my system now.       

If you have any older versions of visual studio, try uninstalling it completely. You should be able to download Business Intelligence development studio along with the instance of your R2. Also after you install the R2 you should should also download and install SQL Server SP1 if you are using windows 7. I could have tried to help you more if i knew what the problem exactly was.

Don't know about it but the problem statement says it all. Check the prerequisites and check the version of visual studio needed.