How to combine .NET RIA Services with MVVM in Silverlight 3

I suggest forgoing the 1990's modal dialogs and instead implementing a control as an overlay (canvas+absolute positioning) with visibility tied to a boolean back in the VM. Closer to an ajax type control.

This is very useful:

<BooleanToVisibilityConverter x:Key="booltoVis" />

as in:

<my:ErrorControl Visibility="{Binding Path=ThereWasAnError, Mode=TwoWay, Converter={StaticResource booltoVis}, UpdateSourceTrigger=PropertyChanged}"/>

Here's how I have one implemented as a user control. Clicking on the 'x' closes the control in a line of code in the usercontrol's code behind. (Since I have my Views in an .exe and ViewModels in a dll, I don't feel bad about code that manipulates UI.)

Agree with ChuckJ - generally the DomainContext forms part of a view model. For example, say I had a search page that allowed searching against a product catalog. Here is how I'd structure things:

On the server:

class Catalog : DomainService {
    IQueryable<Product> GetProducts(string keyword) { ... }
}

The generated DomainContext:

class Catalog : DomainContext {
    EntityList<Product> Products { get; }
    void LoadProducts(string keyword);
}

The view model I would write:

class SearchViewModel {
    Catalog _catalog = new Catalog();

    public IEnumerable<Product> Results {
        get { return _catalog.Products; }
    }

    public void Search(string keyword) {
        _catalog.Products.Clear();
        _catalog.LoadProducts(keyword);
    }
}

And then finally in my xaml, I'd set my UserControl's DataContext to be an instance of SearchViewModel, and bind an ItemsControl to the Results property. I'd use the ViewModel pattern of your choice to bind a button click to Search (which is effectively a command that SearchViewModel exposes). I personally like something that I have working with Silverlight.FX as in:

<Button Content="Search"
  fxui:Interaction.ClickAction="$model.Search(keywordTextBox.Text)" />

and as initially shown here.

As Chuck mentions I might indeed have other state in my view model, for example, the SelectedProduct that might be two-way bound to the SelectedItem of a ListBox in my xaml, and then bind the same SelectedProduct as the DataContext of a DataForm to show details of a selected product.

Hope that helps! I'll be blogging about this some more on my blog soon.