Make VS.NET action not obeying "Copy Local" setting of referenced assemblies

[kinook]

It sounds like an issue with Visual Studio when building from the command line (what the Make VS.NET action ultimately invokes to actually build a solution or project). You can verify this by checking the 'Display command-line...' checkbox on the Options tab, rebuilding the step, then copying and pasting the msbuild/devenv command-line from the build output to a Command Prompt and running it from there. If it occurs outside of VBP, you'll need to open a support incident with MS. Otherwise, we'll need a reproducible case to investigate further, including:
1) The info from Help | About | Install Info
2) The .bld file used to build
3) A build log file
4) A .sln file and project files (no source code files)

Also, building with devenv (select 'devenv' in the Override field on the Options tab) rather than msbuild will tend to perform a build that more closely resembles what the VS2005 IDE does when building and may help.
http://www.visualbuild.com/Manual/vsnetoptionstab.htm
http://www.google.com/search?q=msbui...opy%20local%22