Extensions in Smart Device Project, .net 2.0

Question

I'm working on a Smart Device Project using Visual Studio 2008. I have a static class named Extensions where I want to write extension. I wrote the following extension

static public  Bitmap ToImage(this byte[] blob)
{
    Bitmap image;
    using (MemoryStream stream = new MemoryStream(blob))
    {
        image = new Bitmap(stream);
    }
    return image;
}

and got the following error

I have the experience of adding extension methods in .net 4.0, but in this project I'm having trouble. Is there anything special I've missed?