Clustering SQL is a bit different from other cluster applications, eg Exchange. You do not need to install on both nodes and then create a virtual application server.
Install first one node, remember to check “failover cluster”, other wise you will end up with a standalone server. Follow the wizard and enter the database server name and IP address. The node to install should be the active node which you are currently connected.
The setup should complete successfully.
If the installation node is not the active node, setup will give an ambiguous error about the scheduled task for the installer on the passive node refuse to start. The log file in the passive node will show some like “Bad Windows hash”. It turns out that when installing the passive node, you cannot have any remote desktop connection to it. Otherwise it will fail.
Apparently the same applies for Service Pack installation. Check this out.