I can't relate to that issue personally, but a Vista Business N doesn't work with Vista Business. That's how my installation got screwed. If it's not an upgrade disc I think it should work though. But I can't say for certain.
As long as your disc is official, from Microsoft, it should work just fine. If it a restore disc from the OEM, and not a standard disc, it might not work.
I always prefer to have my SPs installed as part of the OS install. I'm patterned that way from the issues XP had with installing an SP on a system that's been running for a while. However, if someone had downloaded the full install file, and just used that immediately after Vista's install was complete, it should be fine, and it should go quickly.