When I try to create a Visual Studio Shell Isolated project, I get an error that says the specified template cannot be found. I have downloaded and installed the shell and VS SDK setups, and Google yields no results on my search.
How could I start diagnosing the cause of this problem?
I would "spy" what is doing the visual studio. Maybe it is trying to open a non-existing file or something similar. In order to see the system calls of the devenv.exe process, try Process Monitor. You can filter all the system events to the visual studio one's (specifying that process name contains "devenv.exe" in filter window)
Get process monitor here: http://technet.microsoft.com/en-us/sysinternals/bb896645.aspx