www.microsoft.com/express/download/
You can download an ISO with all the express editions or just the Web Developer edition. The only one you need is Visual Studio Web Developer 2008 SP1.

If you don’t have SP1 for Visual Studio 2008, get it here:
www.microsoft.com/downloads/details.aspx?FamilyId=FBEE1648-7106-44A7-9649-6D9F6D58056E

#2 Silverlight Tools for Visual Studio 2008 SP1

Download the tools for developing applications of awesomeness here:
www.microsoft.com/downloads/details.aspx?FamilyId=c22d6a7b-546f-4407-8ef6-d60c8ee221ed&displaylang=en.
If you want some offline documentation, you can download that here:
www.microsoft.com/downloads/details.aspx?FamilyID=bce7684a-507b-4fc6-bc99-6933cd690cab&displaylang=en.

Optional: Expression Blend 2 Trial

This isn’t a requirement but it will give you a good place to start if you’ve never played with XAML. Download it here:
www.microsoft.com/downloads/details.aspx?FamilyId=5FF08106-B9F4-43CD-ABAD-4CC9D9C208D7&displaylang=en
and don’t forget Blend SP1
www.microsoft.com/downloads/details.aspx?FamilyId=EB9B5C48-BA2B-4C39-A1C3-135C60BBBE66&displaylang=en
or Expression Studio 2 Trial here:
www.microsoft.com/downloads/details.aspx?FamilyId=7AE2720C-72BA-489B-ADBB-EE6F3C79066D&displaylang=en

Optional: Deep Zoom composer

Needed if you want to develop deep zoom applications:
www.microsoft.com/downloads/details.aspx?FamilyID=457B17B7-52BF-4BDA-87A3-FA8A4673F8BF&displaylang=en

Optional: Silverlight Toolkit from Codeplex

Nice set of components from the community for you to use or extend in your Sliverlight applications. Download it here:
www.codeplex.com/Silverlight/Release/ProjectReleases.aspx

Other Options

If you want to go hardcore, check out this article on developing Silverlight applications in Eclipse: www.eclipse4sl.org/download/.

If you use Blender, the free open source 3D content creation suite, you might want to check out this XAML exporter. Not that it will fully work for Silverlight (it’s really for WPF). But it’s still pretty cool: www.codeplex.com/xamlexporter

That’s it! Go forth and develop!

Don’t forget to check out silverlight.net for videos, blogs, and forums. More resources: http://www.microsoft.com/silverlight/resources/tools.aspx.