The XSD Designer was removed from VS 2008. The only remnant is the Dataset designer (which, if used to edit any XSD will effectively convert the XSD to a Dataset). A non-visual "Xml Schema Explorer" was added in VS 2008 SP1 as a poor substitute and customers were told that a full featured XSD designer is under development but could not be released in time for the release of VS 2008.
However, if you've seen VS 2010, you'd be very impressed with the new Xml Schema designer which is 'Oh-so-cool !'
