There are a couple of caveats to note when you are installing the new Silverlight 2 bits:
- When installing the Silverlight 2 Tools, install the new version of Blend 2.5 first as if you install in the other order, it occassionally causes bad build steps to be setup in Visual Studio and Blend.
- Make sure that you’ve uninstalled the Silverlight 1.1 Tools and SDK.
- Make sure you backup any Silverlight 1.1 projects before installing hte Silverlight 2 tools as you won’t be able to build them again afterwards.
Hope this helps!