"Could not load file or assembly 'System.Web.Silverlight, Version=126.96.36.199, Culture=neutral, PublicKeyToken=31bf3856ad364e35' or one of its dependencies."
You're starting to Roll your sleeves up and get dirty with Silverlight 2 Beta 2, load up some of the Silverlight Blueprint for SharePoint Samples, run the installer (it's great that most of these examples have an installer) and Boom! you get the above error!!!
Here's a list I've compiled to get Silverlight working - I'm currently running this on Win2008 IIS7
(1) Install WSS SP1/MOSS SP1 on your SharePoint box if you haven't already. You need the SP1 to support .NET 3.5 calls through SharePoint - my guess is that these tell SharePoint not to intercept the calls and let them go to their rightful owners.
(2) Create a 'dummy' site collection on a test Web Application - e.g. http://localhost:81 - This is so you can see all the changes to the web.config that are made through the installation process, in isolation. By keeping this separate to your usual web.config, you'll be able to merge changes at a later date.
(3) Install the Silverlight 2 Beta 2 runtime and other developer bits - From http://Silverlight.net - VS2008 Developer Bits and just the runtime if you want from here
(4) Do one installation of a Silverlight for BluePrint Sample - the installer creates a 'virtual directory' under your Web Site called ClientBin where the various Silverlight 2 files go (*.js, *.XAP). This is a handy install so you can see what the directory execution settings are required to make this work through SharePoint. i.e. Execute permissions only. Take note of this directory.
(5) Add a IIS MIME type - With Silverlight 2 beta 2 - there is a new file type added which is a *.XAP file type. IIS by default doesn't know how to encode/translate or send these files down over the wire.
Add a mime type of: Extention: xap Mime Type: application/x-silverlight-app to your IIS Test Web Site
(6) Make Web.Config changes - there's a whole series of Web.Config changes to be made to your SharePoint Web Application to support AJAX/.NET 3.5 and now Silverlight.... fortunately other hard working folks have done this for you!!!! :) Bless their cotton socks! - grab the Feature that makes the modifications from here (** NB: you want the 3.5 config feature)
You're almost done........ :)
(7) EXCEPT for the error above!!! After much inspection of your system, you'll realise that you *don't* have that DLL (on a clean install). The Silverlight Ninja will know that this is from Silverlight 2 Beta 1 and not found in the Beta 2 kits!! Yay team!
The System.Web.Silverlight.dll is found in the Silverlight 2 beta 1 SDK - so download that puppy, extract out the DLL and either GAC it, or add it to your BIN directory on your SharePoint site. (I added it to my BIN directory - as I reckon when SL2 is released, this problem would have been resolved)
(**UPDATED: Due to how painful that was, I decided to package up the DLL for you - HERE**)
Here are the Compiled Files - FOR SL2 BETA 2 - they WORK!!
(I grabbed the Blueprint Hello World Web Part and updated to work)
1. Silverlight Web Part DLL
2. Silverlight *.XAP updated for Beta 2, copy straight to the *sub-directory* under your client BIN
3. Sample SharePoint Web.Config with all the changes!