To allow a few of you out there to avoid the same time waster I experienced, let me state this one quickly: if you want to develop applications for Azure, you cannot run the DevFabric on Windows 7 Beta. The bug has been confirmed by Microsoft and has no known workarounds. I hit the issue exactly 5 minutes after I had finished a system rebuild to get Win 7 + VS 2008 up and running. Thankfully, I also run Windows Home Server elsewhere in the house and was able to get back to a happy place within an hour.
I know a few of you may have seen Microsoft folks running this scenario; Ron Jacobs did it at the MSDN DevCon in Chicago on Tuesday, Jan 13. Guess what: FOLKS LIKE RON AREN’T RUNNING THE BETA. They have access to internal builds that, apparently, allow one to debug Azure locally. The build we got for the beta probably last had a code update sometime in early December, if not before Thanksgiving. So, if you are digging into that awesome sauce that is Azure, don’t set up a Win 7 dev box.