I instaled Silverlight 2. I also installed the SDK after VWD and Expression.  I tried to install the Tools but they required VS 2008. 

I just downloaded the latest the VWD 2008 and Silverlight 2 and VWD 2008 has no references to Silverlight 2.

I then downloaded Expression Studio 2 Beta Feb 2008 and Expression Blend 2.5 Beta Mar 2008 and again found no reference to SIlverlight 2

 I want to have a Silverlight Asp.Net site where the silverlight app talks to my SQL database.

 Is Visual Studio 2008 the only way for now and when will it change?

I'm wondering if I needed to install the 3.5 Extensions.  But I see no links to the Extensions or references to them in conjunction with the VWD or Expression download.

Silverlight tools require Visual Studio since Silverlight support is a class library project. VWD Express only support Web sites and also Express editions are not extensible so no new functionality can be added after product ships.

There is no 3.5 extensions, only 1.0. Extensions are integral part of the 3.5 framework so no separate download is needed for Ajax in .NET 3.5

So what your saying is that unless MS ship new products, the only way to develop an ASP.Net website that supports imbedded silverlight 2 apps (connecting to SQL server) is Visual Studio 2008.

Yes, this is correct.

Requirements in http://www.microsoft.com/downloads/details.aspx?FamilyId=E0BAE58E-9C0B-4090-A1DB-F134D9F095FD&displaylang=en

 This release required the Visual Studio 2008 Standard, Professional, or Visual Studio Team System 2008. During installation of those products, the "Visual Web Developer" feature needs to be installed.
Visual Studio 2008 should be installed before installing this release.
Note: This release will not work with the Visual Studio 2008 Express editions.

Mikhail Arkhipov (MSFT):

Silverlight tools require Visual Studio since Silverlight support is a class library project. VWD Express only support Web sites and also Express editions are not extensible so no new functionality can be added after product ships.

Hi Mikhail,

Your comment seems to contradict Scott Guthrie's comment on this blog post (scroll down to comment on February 27, 2008 1:13 AM):
 

    Yes - we'll support SL 2 development using the express editions of Visual Studio in the future.

So he's saying there will be support, but you are saying it's technically not feasible.  Unless, of course, that they ship a new updated version of VWD Express 2008 with Silverlight support.

Yes, this is what I mean: we have to ship a new version or a major update , there is no way to "extend" shipped VWD Express 2008.

In December you team said they would a silverlight express verison out for this summer http://blog.donburnett.com/2007/12/silverlight-does-love-visual-studio.html

Is there any connect program/page where we can we download a beta version of Visul Silverlight Express yet?

Silverlight tools is at this point an add-on to Visual Studio. Since Express editions are not extensible, there is no beta available for VWD Express. In order for SL tools to work in Express, re-release of the VWD Express bits is requires, not just release of the tooling add-on.