I am using Windows Server 2008, with IIS7.

Getting the following message.

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Could not load file or assembly 'System.Web.Extensions, Version=3.5.0.0, Culture=neutral, PublicKeyToken=31bf3856ad364e35' or one of its dependencies. The system cannot find the file specified.
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Plz. help.

Do you have your web.config setup properly? For example:
<assemblies>
<add assembly="System.Core, Version=3.5.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/>
<add assembly="System.Data.DataSetExtensions, Version=3.5.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/>
<add assembly="System.Web.Extensions, Version=3.5.0.0, Culture=neutral, PublicKeyToken=31BF3856AD364E35"/>
<add assembly="System.Xml.Linq, Version=3.5.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/>
</assemblies>

and

<system.webServer>
<validation validateIntegratedModeConfiguration="false"/>
<modules>
<remove name="ScriptModule" />
<add name="ScriptModule" preCondition="managedHandler" type="System.Web.Handlers.ScriptModule, System.Web.Extensions, Version=3.5.0.0, Culture=neutral, PublicKeyToken=31BF3856AD364E35"/>
</modules>
<handlers>
<remove name="WebServiceHandlerFactory-Integrated"/>
<remove name="ScriptHandlerFactory" />
<remove name="ScriptHandlerFactoryAppServices" />
<remove name="ScriptResource" />
<add name="ScriptHandlerFactory" verb="*" path="*.asmx" preCondition="integratedMode"
type="System.Web.Script.Services.ScriptHandlerFactory, System.Web.Extensions, Version=3.5.0.0, Culture=neutral, PublicKeyToken=31BF3856AD364E35"/>
<add name="ScriptHandlerFactoryAppServices" verb="*" path="*_AppService.axd" preCondition="integratedMode"
type="System.Web.Script.Services.ScriptHandlerFactory, System.Web.Extensions, Version=3.5.0.0, Culture=neutral, PublicKeyToken=31BF3856AD364E35"/>
<add name="ScriptResource" preCondition="integratedMode" verb="GET,HEAD" path="ScriptResource.axd" type="System.Web.Handlers.ScriptResourceHandler, System.Web.Extensions, Version=3.5.0.0, Culture=neutral, PublicKeyToken=31BF3856AD364E35" />
</handlers>
</system.webServer>


You could also check to make sure the DLL is actually in the GAC.

I found System.Web.Extensions not there in "C:\WINDOWS\assembly"

How can I install that?

Have you not installed the .NET Framework feature?

http://www.microsoft.com/downloads/details.aspx?FamilyID=AB99342F-5D1A-413D-8319-81DA479AB0D7&displaylang=en

Thank you. Its working. I was using old version. Just now updated it through your link.