Not sure I have the answer as I have similar problem which seems variable - 2 suggestions. I am working with Visual Web Developer Express not full VS2005 but did manage to get it to show up once but after reinstall does not:

1. Check that the default at bottom of choices when window opens is for VB and not C#

2. This I am not sure of but seems to be a problem for me. I am working on a network and "My Documents" is mapped to a share - \\server\share$ - the templates get installed in items ands projects section of templates in My Documents under VS2005/....etc. If this is mapped to the server then VWD does not seem able to find it but if I change source of "My Documents" to my local C: drive seems to find them.

The problem I have is that when I go to open new project VWD "hangs" if the starter kit is installed but not if it is not. I now have problem installing the starter kit as say "this is for different version of VS". I have given up with starter kit and just stared copying the Install Zip to the web server.

I know many people say these problems are due to people not reading the instructions but I think for some newbies this is not the case and there are problems for many people starting. 

Paul; UK