It sounds like the one thing you haven't done yet is move the
Microsoft.SharePoint dll's to the development workstation so VS 2005 can
reference them.

i have registered these five ddl's into the GAC
microsoft.sharepoint.WorkflowActions.intl.dll
microsoft.SharePoint.workflowactions.intl.resources.dll
Microsoft.SharePoint.dll
Microsoft.sharepoint.WorkflowActions.dll
microsoft.office.workflow.tasks.dll

The only other thing I can see is that you mention loading the ECM starter kit,
which is currently included in the MOSS SDK install so you might have loaded an
old version of the workflow  extensions for SharePoint. Also, does your list
represent the order of installation? You should install the regular workflow
extensions for VS2005 before the SharePoint Workflow extensions.

Pretty much just shooting in the dark here. I always do my development on a
Virtual image of the SharePoint server so everything is local. It makes
debugging code much easier.

Uninstalled and reinstalled Sharepoint SDK and workflow  extension
according to your list but no luck..any other Possible issue?

Your config is completely unsupported, and it's likely there are
additional dependencies (like .Net 3.0, maybe more dlls, etc) that you
are missing. The preferred (and only supported) development environment
is to develop on a copy of MOSS. As Paul mentions, many (most?) of us
do this in a virtual image.

Sorry, I don't know what else to suggest.