To AJAX-enable your existing ASP.NET 2.0 application follow this video. It takes only a few minutes and essentially makes you create a dummy new Ajax-enabled ASP.NET application and then copy & paste relevant pieces of its web.config file into your application's web.config.
If you are planning to use Ajax Control Toolkit, then instead of creating dummy project from the "ASP.NET AJAX-Enabled Web Site" Visual Studio project template, create the dummy project using "AJAX Control Toolkit Web Site" template. Its web.config has additional entry in the <controls> section of the web.config that will be necessary for your application.