Please note that the Demos Application zip package does not include the Silverlight assemblies and by default reference they are referenced from the Telerik installation folder in your machine. So if you have a previous version of UI for Silverlight installed, this could be the reason for the reported issue. You should either install the latest version using the MSI file or update the references in the application to point to the folder where the latest binaries are extracted.
Let us know whether this helps.
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