Project reference not working in VisualStudio2010

My bet is on a framework mismatch between your library and you app... Check if your library is not building with a superior version than you app, or if your app is building with a Client profile flavor

It is probably that one of your DLLs references some part of the .net framework that is not referenced in your console application. For example if one of your class library projects has asp.net server controls in and references System.Web, but your console application does not reference System.Web it will not build and you will get that error. But it is not obvious because the DLLs referenced are stored in the GAC so they would never appear in your bin folder.