Hi Neo,
You receive this error because the TilePanelSettings object is a DependencyObject.
Silverlight does not support data binding on any object deriving from DependencyObject, but only on objects deriving from FrameworkElement.
You can create a property of type TilePanelSettings and then you can use code like this:

<c:XamWebTileView x:Name="myView"
                               DataContext="{StaticResource myDataSource}"
                               ItemsSource="{Binding Items}"
                               DefaultItemsContainer="{StaticResource myDataContainer}"
                               TilePanelSettings="{Binding Settings}"
                               />

Marin