Make sure you have the proper DLLs referenced in your project. If you are targeting your phone, you'll need to use the binaries in the ARM folder. If you are targeting the emulator, you'll need the binaries in the x86 folder.
Once you've removed the old references and added the proper ones, clean your project and rebuild it. Everything will compile properly.
For more information on adding the correct references, see the Manually creating an app that uses Telerik Cloud Controls for Windows Phone
section on this page in the documentation