On my system, I had Silverlight 2 Beta 1, Visual Studio 2008, Expression Blend 2.5 March Preview, and the Visual Studio Tools for Silverlight 2 Beta 1. I did not uninstall anything.
Here's what the application does:
It uses the Photobucket API to search for images and videos hosted on Photobucket. I am working on a Silverlight library for Photobucket and this is my first example application using it. Search for images and/or video using the search box on the left. When you get results drag them onto the yellow surface and you can draw on top of them. No saving yet, though. And if you are wondering about the video, it's Flash. The videos on Photobucket are hosted in Flash but the API returns the URL of a player so using the HTML bridge in Silverlight, I can create an <iframe> and manipulate it from mouse events in Silverlight:
if (media.MediaType == "video")
url = media.Thumb;
m_videoFrame = HtmlPage.Document.CreateElement("iframe");
double left = e.GetPosition(null).X - m_offset.X;
double top = e.GetPosition(null).Y - m_offset.Y;
m_videoFrame.SetStyleAttribute("left", Math.Floor(left).ToString() + "px");
m_videoFrame.SetStyleAttribute("top", Math.Floor(top).ToString() + "px");
The application (http://xmldocs.net/sketchbook) is a bit rough around the edges but I'm using it to experiment with Silverlight 2 and my Photobucket-Silverlight library.
I'm still looking for people to help me build out the Photobucket-Silverlight library so please contact me if you're interested.