You'll probably receive the following error if you have Expression Blend (in my case Blend 3) and Visual Studio 2008 installed on your development box and now you are attempting to compile the newly downloaded WPFToolkit.   The problem is that Design and Extensibility references are pointing to two separate folders, one to Visual Studio and the other to Expression Blend.  Since the Project is called VisualStudio.Design (there is also an Expression.Design) it is safe to assume we should have both assemblies pointing to the same folder (Visual Studio); once you do this you will be able to compile with no issues.

1. Remove the Design Extensibility from references
2. Add the Extensibility assembly from the Visual Studio folder as indicated by the arrow.