After installing the Silverlight Tools for Visual Studio 2008 SP1 and trying to create a new project in Visual Studio 2008 - I was getting the error, "Requested registry access is not allowed". Doing a little Goooogling I came across this post - basically giving 'Admin' permission to all keys. Seemed a little too extensive. Later in the post is the minimal required to get the Silverlight project to work. I've included the .BAT/ZIP here. As per the instructions:
1) Download and install: SubInACL a command-line tool from Microsoft.
2) Download the SilverLight Project .BAT/ZIP fix file for changing the registry entries here OR copy/paste from here.
3) Unzip and run the batch file.