We have tested against the 2008 R2 RC, which works. We are currently configuring a 2008 R2 RTM server to test against.
If SSMS is open during the install, then you will need to re-start SSMS before you can start using SQL Source Control.
I saw your email that you got it working now, so maybe re-starting was the issue??? I'm glad it is working for you now.
Stephanie M. Herr
SQL Source Control - Project Manager