Error 167 Metadata file 'c:\Program Files\Telerik\RadControls for ASPNET AJAX Q2 2008\Bin35\Telerik.Web.UI.dll' could not be opened -- 'Not enough storage is available to process this command. '
Well one possible solution can be seen in response on this techarena post, which makes it sound like there are a few too many temp files somewhere or other or perhaps something went squirlly during your install that messed up the file? Maybe try deleting any random temp files that windows is holding onto and do a reinstall?
Also, check out this Telerik forum post that references the same problem. Hopefully one of those solutions can help you. :)