I'm having the same problem, and your solution isn't solving it for me, unfortunately.
I'm getting: Error in file:C:\Inetpub\wwwroot\BugNET\Install\dbscripts\BugNET.Schema.SqlDataProvider.sql
Message:An invalid parameter or option was specified for procedure 'sp_addextendedproperty'.
...and that's all she wrote for my install. If I remove the calls to 'sp_addextendedproperty' I can get the app working, but I won't use it for our dev shop without the entire script running properly. The server is MS SQL Server 2000 SP3. I've even tried temporarily adding the database user to the sysadmin role, so it's not a security issue.
Anyone have any ideas? It doesn't look like the calls to sp_addextendedproperty are doing anything terribly important...