The toolkit relies on the Windows Azure, Windows Phone and ASP.NET MVC 2 project types. Therefore, to run the sample solution and create projects from the project templates, you will need to have either Visual Studio 2010 Professional (or higher) installed, or both Microsoft Visual Web Developer 2010 Express and Microsoft Visual Studio 2010 Express for Windows Phone.
Once you’ve download the file, extract it and click on the setup.cmd. The setup process automatically checks if all dependent components are in place and highlights errors if any, as shown below. (I am running Visual Studio Ultimate 2010.) Fix the errors by installing missing components and complete the setup process.
If the setup is completed successfully, you should be able to select Windows Phone 7 Cloud Application from the Cloud category and create a WP7 Azure project.
Enter your Windows Azure account name and key (or you can use local storage emulator if you haven’t signed up for the Azure services yet). You can now start coding for your WP7 Azure App.