I have been struggling to get the Silverlight 4 Tools for Visual Studio 2010 working on my laptop and I think I have found a solution.
The problem: you install the tools and the install (“Silverlight_tools.exe”) doesn’t report an errors. When you open a Silverlight 4 project Visual Studio tells you that you don’t have the tools installed.
Solution: uninstall “Microsoft Silverlight” i.e. the end user runtime and then re-install “Silverlight_tools.exe”. I would also suggest running Windows Update and letting it install the “Microsoft Silverlight” patch.
Additional information: Although “Silverlight_tools.exe” doesn’t report a problem buried in the logs it does says “silverlight_developer.exe” has failed. If you expand “Silverlight_tools.exe” (using WinZip or with the /createlayout option) and manually run “silverlight_developer.exe” it reports that a later version of Silverlight is installed. It seems that “silverlight_developer.exe” is installing “Microsoft Silverlight” but doesn’t support installing over the newer version.