Ajax Control Toolkit does not show up after adding in Toolbox - .Net Framework 3.5

I had to spend sometime around this issue. After adding a new tab to add Ajax Control toolkit controls to my VS 2008 (.Net Framework 3.5) toolbox, i was unable to see the Ajax controls. When i did 'Show All', it showed me my tab but the controls were grayed out. This was something strange to me as i never had such a problem for this when i had worked with framework 2.0.

After breaking my head on this for a while, i finally figured out the issue.

Solution:
Change the project property -> Build -> Target Framework -> change from .NET Framework 2.0 to 3.5.