One of the guys on my team recently tried installing Silverlight 2.0 on one of his older systems.  He got the error, "Unable to install Silverlight" and, "Your processor is not supported."  When you click on More information you see the error:

Message ID: 1503

Microsoft Silverlight is not supported on your computer.  Your CPU does not support the SSE instruction set which is required by Silverlight.

Intel introduced the SSE extension in 1999.  AMD added SSE support in 2001.  Machines with processors that were manufactured prior to those dates did not have the SSE extension.

Silverlight primarily uses the SSE extension for its floating point support.