SharePoint 2007 does not enable ASP.NET AJAX by default. Although the process to enable ASP.NET AJAX on a SharePoint 2007 web application is rather straightforward, it can be time consuming and error prone due to the amount of web.config entries that need to be made. So, a while back a friend and I created a SharePoint solution to enable ASP.NET AJAX on a SharePoint 2007 web application in preparation for a presentation we were giving at a SharePoint developer group.
In a nutshell, the solution first adds the AJAXControlToolkit.dll to the GAC upon installation. Upon activation of the feature on a web application, it checks to ensure that the .NET 3.5 Framework is installed on the current server and then makes the appropriate web.config entries with a feature receiver using the SPWebConfigModification class.
I’m not going to go into any further detail since the process is thoroughly explained on Mike Ammerlaan’s blog in the link above, but you can download my source code and pre-built WSP to use in your environment. Cheers!