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Silverlight 2.0 App Not Starting - Fix IIS
Silverlight 2.0 introduces a new application model. Assets for Silverlight applications, i.e. code and resources are packaged up in a .xap file. When you install the latest version of the The Silverlight Tools for Visual Studio 2008 (http://www.microsoft.com/downloads/details.aspx?FamilyId=25144C27-6514-4AD4-8BCB-E2E051416E03&displaylang=en), you'll find that Silverlight projects automatically create the .xap packages when you check the Silverlight tab of the project properties: