Hmm, today I tried to deploy my Silverlight 2 application to ISS (7) and my content didn't want to display. Hmm..
What was missing is the correct MIME type in IIS, which means that IIS will not allow your browser to download.
Looks like the installer doesn't add this MIME type (on my machine anyway).
Solution is simple:
Add a new MIME type for .xap
Do an iisreset and you're ready to go.
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