Apparatus (all installed):
Visual Studio 2008 Professional Edition
.NET Framework 3.5
Microsoft ASP.NET 2.0 AJAX Extensions 1.0

When I attempt to create a new Web Site, no AJAX option appear.  Any ideas?

You don't need templates for VS2008, only 2005 I believe.  VS 2008 websites are ready for AJAX use upon creation.  You can add a scripmanager to the page and starting AJAXing away.

Hi, from you question what I understand and assume is that  you have successfully installed the AJAX Extentions Tool Kit.............If this is the case then......follow

Go the Solution Explorer and Right Click on the root directory and Click Add Refrence...Or in the Website See for the Add Refrence.......then go the browse tab and locate the AjaxControlToolkit.DLL  and the AJAXExtensionsToolbox.dll then click ok repeat this untill you add both of the Extentions in you project......

Now Restart the Visual Studio and Check.......

If this does not make difference then Try reinstalling the AJAX Extentions Tool Kit I feel your Dot net frame work 3.5 SP 1 is driectly supported to AJAX with out any further dowloads....refer this link and see if it makes a difference.http://www.asp.net/AJAX/downloads/

If problem is there then do let us know........Good Luck

Regards

Sadeed

simply u should install the Ajax Extention tool kit which is available at www.asp.net/ajax/downloads and www.microsoft.com after that u can open ur visual studio instance and check in the tool bar if the ajax extention is appeared then its fine otherwise goto the tool bar and right click and tools library :)