This is a known issue and it is already fixed (the fix will be released with our Q1 2011 controls which will be available next week).
With the Q3 2010 installer you could just use the button "Continue with setup" in order to skip the installation of the Silverlight 4 Tools.
the Telerik team
Registration for Q1 2011 What’s New Webinar Week is now open. Mark your calendar for the week starting March 21st and book your seat
for a walk through all the exciting stuff we ship with the new release!