I am trying to build my first RadContol Silverlight app, and I'm using Visual Studio 2008. I have your Q3 SP1 code, and have SP1 for Visual Studio loaded as well.
I followed the instructions here http://www.telerik.com/help/silverlight/installation-adding-to-vs-2008-toolbox.html
to add the Telerik Silverlight controls to Visual Studio 2008, and when I click on Ok on the Choose Toolbox Items dialog box, I am left with the new tab showing no controls underneath it. In addition, if I close the toolbox, and open it back up, the new tab is gone.
But, if I right-click on the tool-box, and click on show all, it then shows my new tab with all the controls I selected, but they are disabled. If I right-click again, and turn show all off, my new tab disappears along with the added controls.
When I created the project, I selected framework 3.5, and I have a reference in my project to the Telerik controls dll.