I am afraid that the design view is not supported for Silverlight applications in Visual Studio 2008. Here is what Tim Heuer said about this issue:
"Where did my design view go?! You may notice right away that the VS tools no longer have the preview mode for your XAML in Silverlight projects. This is by design. We heard some pretty vocal feedback that the preview was usually turned off for most development because it was not turning out to be helpful as the applications got more complex. The team decided put the resource investment into creating a great editable design surface in VS2010 instead and not delay the release of Silverlight 3."
Due to the many limitations our Silverlight controls are not added to the toolbox. If Visual Studio 2010 is used, on the other hand, you will get design-time support as well as Telerik controls on the toolbox.
All the best,
the Telerik team
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