Ehhhhh! I spent 2 hours trying to figure this out and I want to save others from going through the same trouble.
I followed the instructions in the migration guide for going from beta 1 to 2:
http://ajax.asp.net/files/Migration_Guide_Beta_Beta2.doc
Everything compiled and ran fine except that no AJAX script appeared and ran.
I came across this thread which gave me the idea of restarting IIS, and that fixed it.
The difficulty, it seems, is that the new script handler (ScriptResource.axd) is not registered with IIS until it is restarted.
Cheers
