Install Silverlight 3 Tools Offline

It seems quite stupid that the Silverlight 3 Tools installation will always look to download from internet even you have installed the Silverlight SDK by yourself. More absurdly, the download and installation will fail even you have connection to internet but by using a proxy, which is common in an office. The trick here is to extract them manually into the same folder:

1. In cmd window, uncompress Silverlight SDK: silverlight_sdk.exe /x
2. Uncompress Silverlight tools to the above chosen directory: Silverlight3_Tools.exe /x
3. In the extracted folder, run VS_SilverlightTools_Setup.exe
4. In the same folder, run VS90SP1-KB967143-enu.msp as well as VS90SP1-KB967144-enu.msp (ignore this failure)

The last 2 steps take a while, but eventually you should be able to open silverlight projects in Visual studio then.

Ref: Installing SilverLight 3 Visual Studio Tools Offline