Referenced DLL not being copied to referencing project

This question has been answered already but I figured I'll include a generic fail-safe method for copying all indirect references into your projects' output directories.

1. Set Copy Local to true for all references you want to be included with your output.
2. Save the copy indirect dependencies code (see below) into a file with the name CopyIndirectDependencies.targets and place the targets file in your project directory.
3. Edit your .csproj or .vbproj to include an import to the .targets file you added. See example below.
4. Build your project and you should have secondary dependencies automatically copied to the build output.

---

CopyIndirectDependencies.targets File Content

<?xml version="1.0" encoding="utf-8"?>
<Project xmlns="http://schemas.microsoft.com/developer/msbuild/2003">
  <PropertyGroup>
    <CopyIndirectDependencies   
      Condition="'$(CopyIndirectDependencies)'==''">true</CopyIndirectDependencies>
    <CopyIndirectDependenciesPdb
      Condition="'$(CopyIndirectDependenciesPdb)'==''">false</CopyIndirectDependenciesPdb>
    <CopyIndirectDependenciesXml
      Condition="'$(CopyIndirectDependenciesXml)'==''">false</CopyIndirectDependenciesXml>
  </PropertyGroup>


  <!-- BuildXxx part -->

  <Target Name="CopyIndirectDependencies"
          Condition="'$(CopyIndirectDependencies)'=='true'"
          DependsOnTargets="DetectIndirectDependencies">
    <Copy Condition="'%(IndirectDependency.FullPath)'!=''"
          SourceFiles="%(IndirectDependency.FullPath)"
          DestinationFolder="$(OutputPath)"
          SkipUnchangedFiles="true" >
      <Output TaskParameter="CopiedFiles"
              ItemName="IndirectDependencyCopied" />
    </Copy>
    <Message Importance="low"
             Condition="'%(IndirectDependencyCopied.FullPath)'!=''
               and '%(IndirectDependencyCopied.Extension)'!='.pdb'
               and '%(IndirectDependencyCopied.Extension)'!='.xml'"
             Text="Indirect dependency copied: %(IndirectDependencyCopied.FullPath)" />
  </Target>

  <Target Name="DetectIndirectDependencies"
          DependsOnTargets="ResolveAssemblyReferences">

    <Message Importance="low"
             Text="Direct dependency: %(ReferencePath.Filename)%(ReferencePath.Extension)" />
    <Message Importance="low"
             Text="Indirect dependency: %(ReferenceDependencyPaths.Filename)%(ReferenceDependencyPaths.Extension)" />

    <!-- Creating indirect dependency list -->
    <CreateItem Include="%(ReferenceDependencyPaths.FullPath)"
                Condition="'%(ReferenceDependencyPaths.CopyLocal)'=='true'">
      <Output TaskParameter="Include"
              ItemName="_IndirectDependency"/>
    </CreateItem>
    <CreateItem Include="%(ReferenceDependencyPaths.RootDir)%(ReferenceDependencyPaths.Directory)%(ReferenceDependencyPaths.Filename).xml"
                Condition="'%(ReferenceDependencyPaths.CopyLocal)'=='true' and '$(CopyIndirectDependenciesXml)'=='true'">
      <Output TaskParameter="Include"
              ItemName="_IndirectDependency"/>
    </CreateItem>
    <CreateItem Include="%(ReferenceDependencyPaths.RootDir)%(ReferenceDependencyPaths.Directory)%(ReferenceDependencyPaths.Filename).pdb"
                Condition="'%(ReferenceDependencyPaths.CopyLocal)'=='true' and '$(CopyIndirectDependenciesPdb)'=='true'">
      <Output TaskParameter="Include"
              ItemName="_IndirectDependency"/>
    </CreateItem>

    <!-- Filtering indirect dependency list by existence -->
    <CreateItem Include="%(_IndirectDependency.FullPath)"
                Condition="Exists('%(_IndirectDependency.FullPath)')">
      <Output TaskParameter="Include"
              ItemName="IndirectDependency"/>
    </CreateItem>

    <!-- Creating copied indirect dependency list -->
    <CreateItem Include="@(_IndirectDependency->'$(OutputPath)%(Filename)%(Extension)')">
      <Output TaskParameter="Include"
              ItemName="_ExistingIndirectDependency"/>
    </CreateItem>

    <!-- Filtering copied indirect dependency list by existence -->
    <CreateItem Include="%(_ExistingIndirectDependency.FullPath)"
                Condition="Exists('%(_ExistingIndirectDependency.FullPath)')">
      <Output TaskParameter="Include"
              ItemName="ExistingIndirectDependency"/>
    </CreateItem>

  </Target>


  <!-- Build sequence modification -->

  <PropertyGroup>
    <CoreBuildDependsOn>
      $(CoreBuildDependsOn);
      CopyIndirectDependencies
    </CoreBuildDependsOn>
  </PropertyGroup>
</Project>

---

Sample project with import

<?xml version="1.0" encoding="utf-8"?>
<Project ToolsVersion="3.5" DefaultTargets="Build" xmlns="http://schemas.microsoft.com/developer/msbuild/2003">

  ...

  <Import Project="$(MSBuildToolsPath)\Microsoft.CSharp.targets" />
  <Import Project="CopyIndirectDependencies.targets" /> <!-- ADD THIS LINE!! -->

  ...

</Project>

---

Source: http://blog.alexyakunin.com/2009/09/making-msbuild-visual-studio-to.html

Now I figured i'd add the assembly to project X to make sure that this reference is copied over to other projects using project X. This didn't happen.... So i tried setting the 'Copy Local' setting to true.

You are still talking about the Microsoft.SqlServer.Types.dll right?

I had the same issues some time ago, actually sqlserver types should not be copied and redistributed with your installation. The correct way to "install" it is downloading the sql server runtime (which is included in the sql server management tools, that's why it works for you locally).

Because it is some time ago, I'm not 100% sure if the following information is correct and will work, but simply try to install the Microsoft® System CLR Types for Microsoft® SQL Server® 2012 only. On this download page expand Install Instructions and scroll down to the CLR Types download...

Use this link for SQL Server 2008

Install this on the target server. This will only install the stuff needed to run this types dll...