In the Microsoft Silverlight 1.1 SDK Alpha September Refresh there’s a note in the welcome.htm file that says:

To enable intellisense in Visual Studio, place the Silverlight.xsd in your visual studio Xml directory.

This sounds familiar: intellisense gotchas were something everybody tried to figure out in VS 2005. I’m guessing that the proper directory is:

c:\program files\microsoft visual studio 9.0\xml\schemas\

.. since I see a ton of other .xsd files in there.

How do you know if you’ve copied it to the right location? Fire up the sample solution SilverlightControlsStarterKit.sln that came with the SDK in the \tools\ directory. Open the Page.xaml file. WITHOUT the .xsd in the right location, you’ll see an error like this. With the .xsd in the right location, that Intellisense error goes away.