Thank you for the links Chetan. I've seen them all and tried every solution.

I have tried:

--adding reference to the dll manually.

--registering the assembly on the page, and/or in web.config

--adding controls in toolbox and dragging and dropping to the page (which automatically registers the dll)

--deleting schema files and restarting VS2010.

--downloading AjaxControlToolkit using NuGet.

Nothing seems to be working. I simply cannot get the controls to work.