I usually hate posting these types of questions as normally I find that the best way to really learn is to figure out the answer yourself.
However, I need an answer
Just as an FYI to anyone that might have the same problem - I got this exact error message and couldn't figure out what was wrong since I hadn't changed any settings on my local box.
I realized after a couple minutes that I had accidentally opened the project from a network share on Windows Server 2008. Of course the permissions weren't correct! Really stupid move, but if it helps someone I am willing to be humiliated :)