I came across this issue while building a Silverlight applicaiton.  I had a full install of VS 2008 and did not have any problems on the install.  When I built up my XAML file, VS 2008 did not give any Intellisense.  I will post the reason this is happening as well as the solution.  The problem is VS 2008 wants to open XML files in the WPF Designer.   There is an assumption that VS 2008 lacks a Silverlight XSD file but VS 2008 does include a Silverlight XSD document named WPFE.XSD.  You will have a better experience if you open your Silverlight XAML in the XML Editor.  To correct this problem simply follow the steps below:

1.  Problem (Intellisense not recognized in you XAML document / VS 2008.

2.  To correct the problem right click the XAML file in the solution explorer and select "Open With ...."

3.  Select the XML Editor for the list and select "Set as Default"

4.  Close the XAML page then reopen it.  This should do the trick.