This is what I found out this morning.  I'm running Small Business Server 2003,   to get Silverlight 2 applications hosted on your server.

First install ASP.Net 3.5 at

Here

Usual warnings about this being pre-release software apply, but next you need to install ASP.NET 3.5 Extensions preview at

Here

Finally,  if you re not using Vista or Windows Server 2008,  you need to register the MIME type in IIS.

As follows -

Job done.      As soon I can come up with some creative ideas, I will be posting up some sample applications.