I created a new console application in VS 2010 and imported an existing class library project from the disc into the solution. When I tried to build the project VS was complaining that it was unable to resolve the reference to the project. I did ensure that the imported project was correctly referenced in the console app.
It was due to the fact that the console app was targeting the .net 4.0 client framework and the class library was targeting the full .net 4.0 framework. I changed the console app to target the full framework and voila I was able to build the solution successfully!