I am getting the same error when specifying the TargetProperties property in a PropertyDefinition - like you apart from the blue squiggles and the error message (Cannot modify TargetProperties once the definition has beed added to a collection.) everything works as expected.
Windows 8.1, Visual Studio 2013 Premium, WPF Toolkit v4.0.30319
Windows 8.1, Visual Studio 2013 Premium, WPF Toolkit v4.0.30319
<xctk:PropertyGrid AutoGenerateProperties="False" >
<xctk:PropertyGrid.PropertyDefinitions>
<xctk:PropertyDefinition TargetProperties="Prop1, Prop2 />
</xctk:PropertyGrid.PropertyDefinitions>
</xctk:PropertyGrid>