I found this great post over at techdroid. It shows how to both install and use the development environment and setup the AVD to enable the market. The one downside? No 2.1 or 2.2 version available yet. I'll keep my eyes open, but as of now, I haven't found any yet. Anyone else have a different experience?
And in case the blog disappears at some point in the future, I'm posting the full text of the article here with props to the original author:
Wow, This is cool. Finally, I am able to run the Android Market on the emulator. And also, see all the paid apps and copy-protected app, right here on my emulator.
What do you need?
Well, the basic SDK. 1.5, 1.6 or 1.1
And then, go to the HTC website where you can find the images/recovery images. Download the version (system image only) which you want to run.
http://developer.htc.com/google-io-device.html#s3
(Download the System Image zip)
Extract the files of this zip. There's a system.img file which you will need in the next steps.
Create an AVD (1.1, 1.5 or 1.6) depending on your requirements.
Copy this system.img file into the avd directory. For example, if you created an avd named "MyPhone", go to .avd\MyPhone\ and paste this system.img file here.
Now start the emulator. Voila, You are ready to go. After you sign in with a google account, your phone is ready to use. You now have access to all the market apps right from your emulator.
Note: If you are not able to run it successfully, and if you are getting Network communication error, please download the AVD that I have created from this link.
Link for 1.5 image
www.4shared.com/file/147420185/da5381e1/avd.html
Link for 1.6 image
http://www.4shared.com/file/165624746/fc72c3ed/system.html
