I get this error when trying to build a project using Team Build (MSBuild) on TFS 2010:
C:\\Windows\\Microsoft.NET\\Framework\\v4.0.30319\\Micro
What finally fixed it for me was making the account under which TFS Build service runs an administrator on the local machine.
Don't know though if any of the other stuff I was trying before also needs to be done to get it working. But before it was admin it didn't work after it became admin it worked.