I have spent couple of hours today to get rid of this error while trying to run an application for debugging from Visual Studio 2008. As it turns out to be a unusual error to me, i though to write down the solution to this problem so that it can help others to save their precious time (probably to do some other exciting stuff!!!).
When i first saw this error, i cleaned the solution, restarted Visual Studio. I have even restarted my PC couple of times but with no avail. Then i google it and found some articles where the authors indicated that if there are any operations cause modification to the folder or file structure of the solution, it may happen. But it was not my case, as i was trying to run a simple console application without any pre or post build event.
Then as a trial, i have reset my visual studio settings and bang... it started working normally. Don't ask me anything what caused this problem, i have no idea what modified my visual studio settings but resetting the visual studio settings did the trick for me.