The installer should add the Telerik.Web.Design.dll file in the machine's GAC. We have tested the installer on multiple configuration and it worked in each case.
Could you give us some more information about your system configuration? For example - OS version, service pack, what options did you chose in the installation wizard, etc. If you are using Windows Vista, did you start the installer as an administrator?
You can always install the design DLL in the GAC manually - simply drag and drop the Telerik.Web.Design.dll file from the bin folder of the RadControls 'Prometheus' installation to the C:\Windows\Assembly\