<p>Microsoft has come out with this fairly new technology that I am considering using for a .NET 3.5 application.  I am curious, is anyone using this technology already?  I am worried that the use of the secure virtual machine will negatively affect performance.  Also, the way Microsoft advertises the product, it seems as though the licensing integration is very seamless and does not require any development work in the code.  It seems like a great product but I want to make sure I know of any pitfalls before committing to it.</p>

It seems that SLP does not support .NET 3.5 at the moment.
http://forums.microsoft.com/MSDN/ShowPost.aspx?PostID=3526285&SiteID=1
Your best bet would be to implement an auxiliary DLL containing SLP API calls in .NET 2.0 or 3.0, secure it and add it as a reference to your .NET 3.5 app.