I helped Richard Griffin deploy a Silverlight 2.0 DeepZoom demo he had put together at the end of last week on an internal server. We deployed the application inside a virtual directory in IIS but the application would not load in the browser. Using Fiddler it became apparent that the main Silverlight application was requesting a .xap file from the ClientBin directory but this was coming back as a 404. IIS wont serve unknown filetypes, in order for .XAP files to be served by IIS you need to add a new MIME Type:
Extension: .xap
Mime Type: application/x-silverlight-app