You can now write Silverlight apps in Visual Web Developer Express
One important improvement in the RC0 release of Silverlight 2 is that you can now use Visual Web Developer Express 2008 SP1 to create Silverlight applications. This has been anticipated for a while and I'm happy that they have followed through on their promise and delivered it.
So now you can develop Silverlight apps on a completely free platform which also happens to be one of the best development platforms out there.
You'll need to install Visual Web Developer (must be 2008 SP1) first, you can find it here:
http://www.microsoft.com/express/download/#webInstall
Then install the RC0 Silverlight Tools:
http://www.microsoft.com/downloads/details.aspx?FamilyId=c22d6a7b-546f-4407-8ef6-d60c8ee221ed&displaylang=en
That should be all you need to get started creating Silverlight 2 applications.