2.0 only supports 2005, and doesn't support 2008 as it was released too late to have been supported. You're on the right track with downloaded/reinstalling C# 2005 Express, which is available at the link you mentioned via 'Previous Version' on the top right hand are of the page.
As for SP1, that is available here:http://www.microsoft.com/downloads/details.aspx?FamilyId=7B0B0339-613A-46E6-AB4D-080D4D4A8C4E&displaylang=en
You're after the SP1 update for C# Express, so that is "VS80sp1-KB926749-X86-INTL.exe", once that is installed, you should have no problems reinstalling XNA Game Studio 2.0. There was also no need to uninstall 3.0, 1.0/2.0/3.0 all live happily alongside each other, as do all version of Visual Studio, if in doubt, don't uninstall anything.