Hi Gil,
This is only required under .NET 3.5, not .NET 4.
If you are working from source code see the .NET 4 Transition Plan
If you are using a pre-compiled deployment package for .NET 3.5, it already has this tag mapping in Web.config:
<add tagType="System.Web.UI.ScriptManager" mappedTagType="AjaxControlToolkit.ToolkitScriptManager" />
so it should not have this error if that is present.
Hope it helps,
Joe