MSBuild and Silverlight 2.0 Beta 2 SDK running in Team City
First you need to un-install the Silverlight 2.0 Beta 1 SDK from the build server! Then you can download the Microsoft Silverlight Tools Beta 2 for Visual Studio 2008 and extract it on the server, there you will find the file silverlight_sdk.msi, that will allow you to install Silverlight 2.0 Beta 2 SDK.
Now if you followed my post MSBuild and Silverlight 2.0 Beta 1 running in Team City, then you know about the issue:
Using MSbuild to build a solution in a command line doesn’t copy the Silverlight project output to the linked web project
This issue is still there so my fix is still in my MSBuild file.