Have (finally) been able to display a Silverlight2 sample application within a WebPart – thanks in part to some of the details within a post from Patrick Tisseghem.
Seems like the KEY aspect is that there are some significant changes needed to be added to the WEB.CONFIG for the SharePoint virtual directory.
The other step I had wrong was the MIME type registered for XAP – within IIS-7 (for Windows Server 2008) was :
But – it should have been (and needs to be) :
Patrick has a great article – and video clip also.