If you tried to create or open a Silverlight 2 Beta 2 project after installing Visual Studio 2008 Service Pack 1 (sp1) then i suggest following this installation order to try and resolve it:
Step #1: Cleanup your machine
http://www.microsoft.com/downloads/details.aspx?FamilyId=A494B0E0-EB07-4FF1-A21C-A4663E456D9D&displaylang=en
Note: I also manually uninstalled all SL2 components I had previously installed
Step #2: Install VS 2008 SP1 (or leave it installed)
http://www.microsoft.com/downloads/details.aspx?FamilyID=FBEE1648-7106-44A7-9649-6D9F6D58056E&displaylang=en (or ISO version if you want a one-time download)
Step #3: Install the SL2, BETA 2 (signed 8/01)
http://www.microsoft.com/downloads/details.aspx?FamilyId=50A9EC01-267B-4521-B7D7-C0DBA8866434&displaylang=en
This seems to be the magic version, the link is on Silverlight.net.