Before anyone jumps off a bridge, it is not as bad as the headline sounds; stay calm, step down from the ledge and we can work this out.
Background: I got tired of running PerformancePoint in a VPC all of the time and I decided it was time to install it locally. I am running Server 2008 after all with a full blown install of SQL 2008, so I figured adding SharePoint and PerformancePoint would be less overhead and make some of my development a lot easier.
For those of you wanting to install PerformancePoint Monitoring using SQL 2008, reference my post here.
The root of the error is with the System.Web.Extensions reference in the application. Particularly for anyone running Vista, Server 2008 or even Windows 7, the likelihood that you have 3.5 installed and therefore do not use AJAX 1.0 is pretty high.
So, how to resolve? There is the easy way and then the hard way.
Easy way: Download and install ASP.NET AJAX 1.0. This will put the 1.0.61025.0 versioned DLL reference in the GAC for the application to pull out when needed.
Hard way: Post here with details on resolving old reference to the new. While there is a lot I like about this approach, the only fear is that work done might be undone with Service Packs, hot fixes, etc.
Unless there is no other work solution, I generally avoid these situations as clients do not like to have to call me when it breaks after they have updated or installed the latest service pack.
Beyond that, the resolution can be pretty simple. If you are working locally, just remember to update your hosts file!