I wanna recommend you three posts about encryption with Silverlight. When we store in the Isolated Store, that you don’t want to leave it in clear is possible. So, we should encrypt it.
The System.Security.Cryptography is the namespaced that we must use. They explain how to encrypt/decrypt, generate and store the key,...
You can read it in the following links:
Silverlight Encryption (Part 1)
Silverlight Encryption (Part 2) - Generating the key
Silverlight Encryption (Part 3)
http://eugenioestrada.es/blog