Finally, I was able to get Dynamics CRM 2011 play nice with Sharepoint Foundation (SF) 2010. I think the hiccup was due to me getting SF2010 installed on my windows 7 machine, rather than on a server.
This link has ALL the information you need to install SF on win 7.
http://msdn.microsoft.com/en-us/library/ee554869%28office.14%29.aspx
Pay particular attention to the following:
1. Extract the files using cmd prompt, rather than use tools like winrar.
eg: c:\SharePointFiles\SharePoint /extract:c:\SharePointFiles
2. Edit the config file to allow installation from win 7 machine
3. In "Turn Windows Feature on or off", select the right values from the screenshot.
The above were the things I did not pay much attention to, and thus was scratching my head trying to figure out what happened. Hope you learn from my mistakes!
Once SF2010 is set up, it is pretty straightforward to hook it up with crm 2011. I will follow up with another post for that.
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