I have been able to install 'VS2008 SP1' and 'VS2008 Tools for Silverlight' on my Windows Server 2008 development machine, but I have not been able to install the MSI for 'Silverlight Toolkit July 2009'. The install fails with the following:
"The system administrator has set policies to prevent this installation"
I am a local admin on the box. I have seen something similar when try to to 32-bit MSI on a 64-bit machine. Is that the problem that I am having?
I don't think that you need to install the SL toolkit on the server. At least, we haven't had to. We're using 64-bit Windows Server 2003, and any required Silverlight DLLs, etc., just get included in our .xap file, and get downloaded by the client when it downloads that file. All the server knows is that it's got to pass the .xap file down to a client when it requests it. The only thing that any server-side process might need to know about is the System.ServiceModel.PollingDuplex.dll (if you're using duplex WCF services), but if you simply install the SL 3.0 SDK on your dev machine, and then reference that DLL from your WCF project, it'll get included with your WCF project when you roll it out to the server in question.
The only reason you'd need to install those things on the server is if you're planning to do development on the server, which I suppose you might want to, but certainly isn't normal :-).