Below lists the steps I had to take to get it working.

Installing:
• Download Xpand!2
• Install (select proper VST directory (take note of where it is!))
• Open VST directory, remove exclamation ! from "Xpand!2.dll" (I tried without doing this and reaper couldn't see the file for some reason (using Windows 7))
• Open DAW
> You will have a pop-up to activate Xpand!2.
(If it doesn't auto-scan for new VSTs, double check VST directory, then click scan)
> Enter your CD Key (do NOT use iLok if you don't have it, or you may assign your license to an iLok USB dongle that you don't have by mistake)

Getting started:
• Click Insert
> Insert Virtual Instrument on New Track
> Click Instruments > Xpand!2 (AIR Music Technology)
> Change Input on the instrument panel on the left to "Input: MIDI > Virtual MIDI Keyboard > All" or "All MIDI Inputs > All" if you have an external MIDI controller.
• Click Insert > New MIDI Item
• Double click the new MIDI track to edit it by hand

Notes: I notice that after changing some settings, I had to stop the loop and play it again to notice the difference.