In Visual Studio 2005 the XSD compiler was in the SDK/v2.0 directory. In Visual Studio there is only a SDK/v3.5 directory has gone and so too has the xsd.exe compiler. Where has it gone?
Not being completely happy with the above answers I have found that the SDK containing amongst other things the XSD.exe compiler is distributed now as part of the Windows SDK. See http://msdn.microsoft.com/en-gb/windows/bb980924.aspx?wt.svl=more_downloads
It is distributed as part of the Visual Studio 2008 package but they have moved it from the Visual Studio directory tree to:
on 32bit Windows "Program Files/Microsoft SDKs", and on 64bit Windows "Program Files (x86)/Microsoft SDKs"