SQL Server Express Shipping with Limited .NET 4.0 Support
With a recent update to Service Pack 1, Microsoft can now offer a version of SQL Server 2008 Express that runs with .NET 4.0 Beta 2. Previously users had to have .NET 2.0 SP2 or .NET 3.5 SP1 installed as a prerequisite. However, support is currently quite limited.
SQL Server 2008 Express can only host a single version of the CLR for the purpose of SQLCLR. To prevent introducing a breaking change, they are going to continue only support CLR 2.0. This means that even though you can install SQL Server Express with only .NET 4.0, you can’t use all of its capabilities. This includes built-in CLR types such as geometry, geography, and hierarchyid.
.NET 4.0 support has only been enabled on the runtime-only version of SQL Server Express. The other editions, SQL Server 2008 Express with Tools and SQL Server 2008 Express with Advanced Services, still require .NET Framework 3.5 SP1
For more information refer to Krzysztof Kozielczyk’s FAQ.