Ben Waggoner just did a great blog post that shows you how to encode screen recordings for display in Silverlight. We on the Expression Encoder team like his settings so much that we are using them as the defaults in the final version of Expression Encoder 2.
You can see the results over on the IIS blog. Here is an example:
Install only the components you need for your Web applications by leveraging IIS7’s modular architecture. This tutorial will cover installing the modules necessary for serving ASP and ASP.NET pages from IIS7 in Windows Vista.
As Ben says, make sure you go full screen to get the full effect.