Every time I try to open the csproj file for Rainbow with Visual Studio (I just ran the .msi installer file to install Rainbow on Windows 2000 Server), I get the following error:

"The project you are trying to open is a Web project. You need to open it by specifying its URL path."

If I try to open it as a Project From Web, it still doesn't work. I know this must be a foolish mistake I am making - any help appreciated.

The Project needs to know where it resides in relation to your webserver.
You could try a few things.

instead of opening c:\blah, blah, blah. Try opening http://localhost/rainbow/defalt.aspx
(this is assuming your rainbow install is in Inetpub/wwwroot/rainbow or a virtual directory called rainbow recognized by your web server.)

Open the solution file with notepad and see what web path the solution file wants to be. Should be right near the top.

Let me know if that helps.
Chad