Be warned: the ability to do nested animations will likely go away in future releases of Avalon.  The recommendation is to use storyboards to wire up all animations.  Below is a sample of wiring up a 3D animation in XAML from the introducing Avalon article on MSDN:  http://msdn.microsoft.com/Longhorn/archive/default.aspx?pull=/library/en-us/dnlong/html/avalonmarch2005ctp.asp

The sample also shows off VisualBrush, which is a pretty nifty feature...

<Window xmlns="http://schemas.microsoft.com/winfx/avalon/2005" 
   xmlns:x="http://schemas.microsoft.com/winfx/xaml/2005" >
   
   < Window.Storyboards>
   <ParallelTimeline>
    <SetterTimeline TargetID="myViewport3D"
      Path="(Viewport3D.Models).(Model3DGroup.Children)[2].(GeometryModel3D.Transform).(RotateTransform3D.Rotation).Angle">
      <DoubleAnimation From="0" To="360" Duration="0:0:5" RepeatBehavior="Forever" />
    </SetterTimeline>
    </ParallelTimeline>
   </ Window.Storyboards>
<Grid Background="#333399">
<Grid.Resources>
  <MeshGeometry3D x:Key="PlaneMesh"
    Positions="-1 -1 -0.5  1 -1 -0.5  -1 1 -0.5  1 1 -0.5  0 0 1"
    Normals="-1 -1 1  1 -1 1  -1 1 1  1 1 1 0 0 1"
    TextureCoordinates="0 1  1 1  0 0  1 0  0.5 0.5 "
    TriangleIndices="0 4 2 2 4 3 4 1 3 0 1 4" />
</Grid.Resources>
<Viewport3D ID="myViewport3D" ClipToBounds="true" Height="480" Width="640" Focusable="true">
  <Viewport3D.Camera>
    <PerspectiveCamera  
      LookAtPoint="0,0,0"
      Position="0,0,5.0"
      Up="0,1,0"
      NearPlaneDistance="0.25"
      FarPlaneDistance="20"
      FieldOfView="60" >
    </PerspectiveCamera>
  </Viewport3D.Camera>
  <Viewport3D.Models >
  
  <AmbientLight Color="#FF0F0F0F" />
  <DirectionalLight Direction="1 1 -1" />
  <GeometryModel3D  Geometry="{PlaneMesh}" StatusOfNextUse="ChangeableReference" >
    <GeometryModel3D.Material>
      <BrushMaterial >
        <BrushMaterial.Brush>
    <VisualBrush Viewbox="0,0,100,100">
 <VisualBrush.Visual>
          <Grid Background="green">
            <StackPanel Width="200" Height="200" Background="yellow">
              <Button></Button>
              <TextFlow>This is some text.  Watch how it wraps around 
the 3d model.</TextFlow>
            </StackPanel>
          </Grid>
       </VisualBrush.Visual>
    </VisualBrush>
        </BrushMaterial.Brush>
      </BrushMaterial>
    </GeometryModel3D.Material>
    <GeometryModel3D.Transform >
        <RotateTransform3D Center="0 0 0" >
          <RotateTransform3D.Rotation>
            <Rotation3D Axis="0 1 1" Angle="40" >
            </Rotation3D>
          </RotateTransform3D.Rotation>
        </RotateTransform3D>
    </GeometryModel3D.Transform>

  </GeometryModel3D>
  </Viewport3D.Models>
</Viewport3D>
</Grid>
</ Window >