What accounts to use when installing SQL Server 2008 Developer

If you want to play it safe, make a local account like "SQLServices" on your machine, with no special rights or access. Then install SQL and choose that account, and the SQL installer will add only those rights that the service account requires. I do it this way so that the service account will have only minimal OS rights.

From Microsoft:

Local System account. The name of this account is NT AUTHORITY\System. It is a powerful account that has unrestricted access to all local system resources. It is a member of the Windows Administrators group on the local computer, and is therefore a member of the SQL Server sysadmin fixed server role

Network Service account. The name of this account is NT AUTHORITY\NetworkService. It is available in Microsoft Windows XP and Microsoft Windows Server 2003. All services that run under the Network Service account are authenticated to network resources as the local computer.

So unless you need your Dev SQL Server to use Network Services, you can use Local System account.

Update:

To Configure your surface area go Start->Microsoft SQL Server->Configuration Tools->SQL Server Surface Area Configuration.

Thats how you setup for incoming connections. Also make sure the SQL Browser server is running.

I would also recommend either SQL 2005 for Dummies or SQL Server 2005 Bible to do some study on some of the basic stuff of SQL Serve. The bible will also go more indepth should you be beyond the dummies type book.