I have been using the great SQL Server to SQL Server Compact Edition Database Copy utility written by Scott "Johnny" Smith. It really is incredibly useful so that one can design/manage your database on a non-compact SQL Server instance and then copy both the schema and data over into a .SDF file for use with Compact Edition.
It does some initial checks when the target Compact Edition assembly is selected and the version available did not seem to support Microsoft SQL Server Compact 3.5 Service Pack 1. I have modified the source to cater for SP1 and the updated version can be found here. I have tested it with the current application I am working on and there don't seem to be any issues, but further testing is probably required.
I recently rebuilt my development VM and installed Visual Studio 2008, SP1 followed by the Windows Mobile 6 SDK Refresh and the Windows Mobile 6.1 Emulator Images. When opening a solution with a project that targetted the Windows Mobile 6 platform I received "the application for the project is not installed".
Seems like other people have had the same issues, but simply uninstalling and reinstalling (repairing did not work) the SDK Refresh seemed to fix it. The same applied for the 6.1 Emulator Images as initially they were not available as a deployment target, but once I uninstalled and reinstalled them they were. Very odd.