<p>I'm using Visual Studio 2008 and the built-in installation tools for a C# client application. How can I use this installer to install a font on the client machine (if it's not already there)?</p>

Take a look at this article.
http://www.atakala.com/Browser/Item.aspx?user_id=amos&dict_id=83
The most important call is the
AddFontResource
Win32 API call altough the described sequence of operations must be respected for you to have a working font setup in the system.
http://msdn.microsoft.com/en-us/library/ms534231(VS.85).aspx
The AddFontResource function adds the
  font resource from the specified file
  to the system font table. The font can
  subsequently be used for text output
  by any application.