I just try SmartPart and enable AJAX functionality in SharePoint tonight, here are few notes:
1. Download and install SmartPart (make sure SmartPart is deployed and affect all WSS sites as shown in the last step of the Setup wizard)
2. Activate SmartPart features (either admin UI or stsadm -o activefeature command)
3. Config AJAX extension in SharePoint (otherwise, you will get an "Unknown server tag 'asp:UpdatePanel' " error)
4. Create a AJAX-enabled website and "user controls"
5. Copy ASCX to UserControls folder to your SharePoint app
All developers are recommended to read the blogs from Jan and Michael first of course.
BTW, I saw another error message "This control does not allow connection strings with the following keywords: ‘Integrated Security’, ‘Trusted_Connection’." in my experimental application. After a quick googling then I change (it's the normal practice BTW) to use a limited rights user account instead of using integrated security in connection string and the problem solved.