Check your bin folder on the deployed system. It should contain AjaxControlToolkit.dll.
The AjaxControlToolkit only references System.XXX libraries. That means that either the full DLL is not available, you use the wrong .NET version (.NET 3.5 required) or the file is corrupt. Since you mention .NET 2.0 (which is the actual version underneath .NET 3.5) it may be a version conflict. Try to upgrade to .NET 3.5 and try again.
