Vijay Bangaru has the story at the WinFS Team Blog:
MSDN subscribers can now download our Beta 1 Refresh release. This release contains the same functionality of our original Beta 1 release and runs on the final release of the .NET Framework 2.0.
Unsuprisingly, you have to delete prior betas of WinFS, VS 2005, and .NET 2.0. Details by following the link.