Ok, found the answer!
Because I am running Windows 7 64-bit, by default the 64-bit version of sidebar.exe is run, which in turn uses IE 64-bit! Silverlight and flash is not supported on these OS'es!
to proof that it's the case, try the following! Close all your gadgets and run C:\Program Files (x86)\Windows Sidebar\sidebar.exe (The 32 bit version) and add your gadget! This should now work! You can add sidebar to you startup programs which should solve most of you issues but this still sucks! Would be great if the gadget.xml file asked you if you want to force 32 bit mode?
http://brandonlive.com/2008/03/11/dont-write-gadgets-with-flash-or-silverlight/
Not really.
The directory that serves as a common
repository for application-specific
data for the current roaming user.
AppData is, surprisingly, for application data, not for installation (Click Once/Silverlight applications aside). You can, and should still install into Program Files, just don't expect to write into that folder.
You can install software into AppData if you want it to follow a user about in an Active Directory environment, which happens if you put it in AppData\Roaming (the SpecialFolder.ApplicationData location).
You can also install into AppData if you want the software to be available to just the user that installs it. This can be useful if, for example, you have multiple users on the same machine, who all want to run different versions of the software in complete isolation.
If you want settings to only apply on the local machine then you use AppData\Local, which is SpecialFolders.LocalApplicationData - this will make AD administrators very happy as the roaming profile size won't suddenly jump up 50Mb or whatever the size of your software is.
If you wanted to create settings which apply to all users then you're looking at SpecialFolders.CommonApplicationData
You should remember never to rely on the actual name of the directory - localisation issues mean this can change and the location does change with OS versions two. You should be using the special folder enumeration in your software, or the equivalent in your installer.
Could you not install into Program Files, but use AppData as it's supposed to be used, and store your database in there?
Best Answer
The following MSDN Article covers this:
http://msdn.microsoft.com/en-us/library/cc982277(VS.85).aspx