Normally, you don't have Visual Studio installed in build servers.  Unless you're using the setup and deployment package which can only be compiled by the IDE executable devenv.exe, that's the time that you install VS. 

As such, you only have the .NET SDK installed and just uses MSBUILD to compile the VS2005 projects.  MSBUILD can compile visual studio projects with the help of its targets files.  The SDK comes with the default targets files to compile common type of projects.  However, if you are using Web application projects, it uses a different targets file ("Microsoft.WebApplication.targets"), which ships with VS2005 SP1.  Basically you just include the said targets file in your trunk and edit the project file for the path of the said targets file.  Thanks to this post.