The installer will install a website that will host the Silverlight application and services, and a Windows service that will connect to a TFS server. You do not need to install on the same box as the TFS server as you will make reference to to the server in a configuration file.
Once installed, on a client you'll need to have the Silverlight 4 RC runtime and then you'll browser to http://<server
name>:9898 address to run the application.
More details on all of this can be found in the documentation located here:
Hope this helps,
the Telerik team
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