I finally got around to check out how to connect the Smart Device Emulator in Vista. (See the course FAQ for doing this in XP.)
The big difference is that ActiveSync is replaced with the Windows Mobile Device Center.
It turned out to be pretty straightforward in my environment and fairly similar to setting up ActiveSync in XP. I tried this on my laptop running Vista Ultimate and Visual Studio 2008 (not 2005!). Before starting the device emulator I went to the mobile device center and opened up the connection settings. The only thing I had to adjust is the "allow connections to the following" (see image).

The "allow connection to the following" option has to be checked and DMA (direct memory access) needs to be selected. Then I started up the emulator via the device emulator manager in Visual Studio (Tools->Device Emulator Manager).
I cradled the emulator and ... it connected without a hitch.
Now, if you use Visual Studio 2005, you need to download and install the new device emulator (version 2). Visit the following sites for more information.
http://blogs.msdn.com/anandba/...
http://blogs.infosupport.com/blogs/willemm/...
Let me know if you still run into issues.
MH
Technorati : BUS ADM 740, device emulator, vista