I installed Visual Studio 2010 Beta 2 in an XP Mode VM on Windows 7. Then I created a trivial Silverlight 4 (beta) project and tried to build it. I get the following error:

Error 1 The "ValidateXaml" task failed unexpectedly. System.IO.FileLoadException: Could not load file or assembly 'file://\tsclient\d\Users\me\Documents\Visual Studio 2010\Projects\SilverlightApplication2\SilverlightApplication2\obj\Debug\SilverlightApplication2.dll' or one of its dependencies. Operation is not supported. (Exception from HRESULT: 0x80131515)

File name: 'file://\tsclient\d\Users\me\Documents\Visual Studio 2010\Projects\SilverlightApplication2\SilverlightApplication2\obj\Debug\SilverlightApplication2.dll' ---> System.NotSupportedException: An attempt was made to load an assembly from a network location which would have caused the assembly to be sandboxed in previous versions of the .NET Framework. This release of the .NET Framework does not enable CAS policy by default, so this load may be dangerous. If this load is not intended to sandbox the assembly, please enable the loadFromRemoteSources switch. See http://go.microsoft.com/fwlink/?LinkId=155569 for more information.

at System.Reflection.RuntimeAssembly._nLoad(AssemblyName fileName, String codeBase, Evidence assemblySecurity, RuntimeAssembly locationHint, StackCrawlMark& stackMark, Boolean throwOnFileNotFound, Boolean forIntrospection, Boolean suppressSecurityChecks) at System.Reflection.RuntimeAssembly.nLoad(AssemblyName fileName, String codeBase, Evidence assemblySecurity, RuntimeAssembly locationHint, StackCrawlMark& stackMark, Boolean throwOnFileNotFound, Boolean forIntrospection, Boolean suppressSecurityChecks) at System.Reflection.RuntimeAssembly.InternalLoadAssemblyName(AssemblyName assemblyRef, Evidence assemblySecurity, StackCrawlMark& stackMark, Boolean forIntrospection, Boolean suppressSecurityChecks) at System.Reflection.RuntimeAssembly.InternalLoadFrom(String assemblyFile, Evidence securityEvidence, Byte[] hashValue, AssemblyHashAlgorithm hashAlgorithm, Boolean forIntrospection, Boolean suppressSecurityChecks, StackCrawlMark& stackMark) at System.Reflection.Assembly.LoadFrom(String assemblyFile) at Microsoft.Silverlight.Build.Tasks.ValidateXaml.XamlValidator.Execute(ITask task) at Microsoft.Silverlight.Build.Tasks.ValidateXaml.XamlValidator.Execute(ITask task) at Microsoft.Silverlight.Build.Tasks.ValidateXaml.Execute() at Microsoft.Build.BackEnd.TaskExecutionHost.Microsoft.Build.BackEnd.ITaskExecutionHost.Execute() at Microsoft.Build.BackEnd.TaskBuilder.ExecuteInstantiatedTask(ITaskExecutionHost taskExecutionHost, TaskLoggingContext taskLoggingContext, TaskHost taskHost, ItemBucket bucket, TaskExecutionMode howToExecuteTask, Boolean& taskResult)

I believe this is related to the fact that XP Mode redirects the My Documents folder to the host, turning it into a network share location, and some sort of CAS / security policy is being triggered.

Anyone know how to fix it?