There is a new version of Expression Blend (Blend 2 August Preview) that was released right after Beta 2. Have you tried it?
I have the Expression Blend May Preview and .Net 3.0 Service Pack 1 on my XP computer with no problem.
I suggest you ask in the Expression Blend Forum.
I have the exact same problem as described by you. I noticed another thing. I cannot seem to see any controls except the TextBox and 2 other basic controls. I have Blend RC version on another computer and I can see a lot of controls. i installed Blend 2 August Preview and then installed VS2008 Beta 2. i was looking for this issue until I found this post. Please MS guys, any help would be great. There is no mention of this issue on any Blend blogs.
Thanks for the feedback. Unfortunately, this is a known issue that has since been fixed in the WPF bits post Beta2. We don't know of a workaround - this will be fixed in the next refresh of the .Net Framework 3.5 bits.
Thanks,
-Unni
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Unni Ravindranathan
Program Manager
Microsoft Expression