Are you sure about the cause that you have identified? Could it be a null exception encountered during deserialization.Have you loaded Silverlight 5 by chance?
I ask because there is a critical serialization bug in the Silverlight 5 release (RTW) acknowledged by Microsoft; apparently they took a dependence on a serialization method that does not exist in desktop .NET 4. "So what?" Well both Cider and Blend are actually running desktop .NET 4 when they display your Silverlight XAML. Too bad for all of us; serialization does not work.
Microsoft has no intention of "fixing" SL 5 to address this. They have advised us that the developer should either revert to SL 4 (remove all SL 5 from the machine) or hang on for .NET 4.5; you can try a CTP of .NET 4.5.
Frankly, we don't think any of these workarounds are appropriate. We are trying to find something else to recommend; no luck so far.
It doesn't look good for designing with data that has been restored from an Entity Cache file ... or for any tactic that involves (de)serialization.
For now we suggest that you create design data dynamicall with a "Data Mother" class: a class that instantiates design-time entities and populates an offline EntityManager; these become the data source for design time data binding.
We regret the (temporary) loss of the entity cache file feature. I wish we knew a way around it. I'll certainly let you know if we come up with something.
Root for .NET 4.5 I guess.
If this is not the immediate cause of your problem and you are willing to live entirely in SL 4, please post again with more detail and we can get you going.