This is a great walk through on how to install ASP.Net 2.0 Ajax Extensions in Sharepoint so you can write and use Ajax-enable applications within sharepoint. Use this in conjunction with Microsoft .Net 3.5 applications and you can get some nice apps written quickly using LinqDataSource, Listviews, and ASP.Net Ajax. A tutorial is coming soon.
There is a note in the installer:
Note that the procedure described below applies to .NET Framework 2.0. If you are using .NET Framework 3.5, change the version number in each of the XML snippets from Version=1.0.61025.0 to Version=3.5.0.0.
I followed the directions and replaced all 1.0.61025 to 3.5.0.0 and had no problem with WSS 3.0 SP1.
Installing ASP.NET 2.0 AJAX Extensions 1.0 in Windows SharePoint Services Version 3.0