I tried to install K2 on both fresh Joomla! 1.6 and 1.7. There were no error message during the installation process. However, I don't see any K2 icons on the dashboard after installation, nor K2 as an item in the Component menu in admin. What I can see is only K2 Content, User, Login, and etc. under Extension Management.

What did I do wrong? Or K2 is still not fully compatible with Joomla! 1.6, 1.7?

See the blog posts here, k2 2.5 has been released for 1.7
If you are having problems with the installation on a fresh joomla install with 1.7 you probably have a permissions problem that is interfering with the install. Try dl the latest version and reinstall over the top of an existing install...BackUP FIRST