I have been tracking down this problem all morning and ended up having to file a bug report on VS2005 for it.
If you want to read it, its here.
The filenotfound exception is the system trying to find MSVCR80.DLL version 8.0.50608.0, which is nowhere to be found because the .LIB's mismatch the latest version of the DLL which is 8.0.50727.26. Furthermore, the header files are also referencing 8.0.50608.0, so the resulting side-by-side manifest is referencing a version of MSVCR80 that does not exist.
All this means that I will not be able to publish the 1.0.19 version today as I had hoped. Not even statically linking the CRT does any good.
Robert