If you download and install .NET Framework 2.0 Software Development Kit (SDK) (x86) or .NET Framework 2.0 Software Development Kit (SDK) (x64)
You should be able to find the xsd.exe in
C:\Program Files\Microsoft.NET\SDK\v2.0\Bin
I tested it with a new project targeting the 2.0 framework and it compiled fine in VS2008. Hopefully it will work too in VS2005.