Developing Xbaps (WPF web apps) can be a frustrating experience IF you are not sure about the supported features and the trust levels. A simple scenario would be copying text content from a xbap. Ouch! that wont work because of the heightened security. So its always a good thing to first read the basics before you start developing one.
Karen Corby has written a couple of posts on xbaps and they provide comprehensive info on xbaps. The first one delves on features (Link). The second post talks about the security levels (Link). These two posts are must reads in addition to the info in the SDK. Happy reading