Issues with ASP.NET Ajax after upgrading web site to Orcas beta 2?
If that's the case, see following posts
ASP.NET AJAX in .NET 3.5 and VS 2008
Upgrading ASP.NET AJAX 1.0 Websites and Web Applications to .NET Framework 3.5
You'll find an explanation of the upgrade issue in beta 2 which requires you to do a little Framework switch in VS2008 to get it corrected. Luckily, it's very minor one.
Note: it concerns only web sites, not web application projects. One more good reason to use WAP. :-)