I have an issue on my machine that seems to be related to the Infragistics Silverlight install, that was very difficult to track down.  In fact I had to use an Incident with Microsoft Support.  Another developer here with the same setup does not have this problem, so it may be isolated, but I figured I'd share in case somone else out there runs into it.

If I create a Visual Basic Web-Asp.Net Web Application Project that initially targets the 2.0 Framework, and then change that to target the 3.5 Framework, I now have a reference to System.Core that points to the Infragistics Silverlight\Bin folder.  If I try and run this project now, (note that this is just a brand new empty project, no additional references or code), the browser opens with this error:

Compiler Error Message: BC30560: 'ExtensionAttribute' is ambiguous in the namespace 'System.Runtime.CompilerServices'.

The fix is to remove the System.Core reference and re-add it using the 3.5 version.  Creating the project from scratch targeting 3.5 is fine, it is only when you change from 2.0 to 3.5.

Hope this helps somone!