I would say that the only time Visual Studio should ever be involved, is if you are using the developer deployment cycle like I am:
- Download the latest source code using TorgoiseHG
- Build the solution
- Visit localhost/setup through either the Visual Studio browser, or outside of Visual Studio in the browser with IIS installed on the workstation (that's my choice).
However, if you are downloading the deployment files and unzipping them, as it sounds like you are, you should:
- Extract the deployment files to a known folder
- Set up IIS to point to that folder as the root of the site (IIS site basic settings)
- Load your browser and visit localhost/setup.
I would never attempt to use Visual Studio with the deployment files, and I think that was what Joe was trying to get at with his short reply. Hope that helps,