A friend of mine sent me a WPF XAML project for use in Visual 2005 that gave me the error "This project type is not supported by this installation" when I tried to open it. I had the same error when I tried to open some other WPF demo projects that shipped with WPF SDK. Here is the dialog I saw when I tried to open the project:

After digging for a bit, I discovered that if you download the WPF/WCF extensions for Visual Studio CTP then the problem is resolved. Here is the main page for the family of products to which this CTP belongs. These extensions include Cider, a layout designer for WPF that integrates with Visual Studio.

Before I discovered these extensions to Visual Studio, I was stumped by this problem.  Fortunately my fellow PM Anson Horton looked at the project (csproj) file for a few minutes, and decided that this line looked funny to him:

<ProjectTypeGuids>{60dc8134-eba5-43b8-bcc9-bb4bc16c2548};{FAE04EC0-301F-11D3-BF4B-00C04F79EFBC}</ProjectTypeGuids>

He removed the offending line from the csproj file, and the project loaded even without adding the WPF CTP. Once we knew the error, we searched for it online and found a forum post by Ashish Shetty which addressed this issue.

However, the best solution is not to remove this line for the csproj file. Instead, you should download the WPF/WCF CTP mentioned above.