I have the following project structure:
Library1 <--[project reference]-- Library2 <--[ref]-- Executable
-------- --------
Another option would be to embed ContentFile as a resource inside the Library1 assembly and extract it using Assembly.GetManifestResource().
See these links for more info:
http://www.attilan.com/2006/08/accessing-embedded-resources-using.html
http://blogs.msdn.com/b/alexdan/archive/2007/12/19/loading-embedded-resources-in-c-using-getmanifestresourcestream.aspx