I have a winform solution that I deploy through clickOnce. There is the Main Project and then a Project called psWinForms. That project has a Reference to
do you have the assembly referenced in your MAIN application? I didn't see that scenario listed...I have found that for copy local to work, you need to have all sub-projects references in the main application reference list otherwise you get unpredictable results. Also if you need your specific file to be used, make sure use specific version is true.
the same goes for App.config sections...if you have project level appconfigs you have to merge that with the application level app.config.