The first release of Silverlight 1.1 Tools for VS2008 was broken. There was a second release of it, but I can no longer find the download for it. This version is about 4 years old now.
You can find Silverlight 3.0 for VS2008
here[
^].
Version 4 is out, but it only work with VS2010. Silverlight 5.0 is in Beta.