To install the prerequisites on SBS server 2008 with SQL 2008 (not R2).
On the SBS server use the Web Platform Installer 3.0.
In the Web Platform Installer menu choose 'Products', in the bar on the left choose 'Tools'.
Then select Visual Studio Lightswitch 2011 Server Runtime without local SQL.
Althought this is for a 3-Tier deployment ( IIS server - SQL server on separate machines) this should make it work. I intend to use the SQL 2008 standard edition on the SBS server.
2012-03-10 - I have discoverd that sometimes it is necessary to install the Web Deployment Tool also. This is necessary on the Windows Server with IIS, to publish from Visual Studio to the Web server, i.e. when not publishing to a package. New post about installation here.