An Error Has Occurred:
Silverlight Tools cannot be installed because one or more of the following conditions is true:

1. Visual Studio 2008 RTM is not installed.
2. The Web Authoring feature of Visual Studio is not installed.
3. A previous version of the Silverlight Runtime is installed.
4. A previous version of the Silverlight SDK is installed.
5. The Visual Studio Update KB949325 is installed.
6. A previous version of Silverlight Tools is installed.

To continue, please install or uninstall the appropriate products and run this installer again.

Extract the file with 7zip
when extracting the files you can use each installer to instal the files seperately, but when I tried to use the toolbox it wouldn't work...

Solution
After some research it turns out that the Silverlight 2 Tools Beta 1 for Visual Studio 2008 installs the Silverlight 2 Beta 1 runtime and SDK as part of the package. This causes a problem if you already installed the plugin or the SDK.

Apparently the Registry Entry “HKLM\SOFTWARE\Microsoft\VisualStudio\9.0\ToolboxPages\Silverlight Components” must not exist or the installer fails. After simply removing this entry, the install worked without a hitch. This must not get removed correctly by some versions of the Silverlight Tools.