VS2005 .NET exception when running converted VS2003 application

[carbon_dragon]

The application is a console app, though it does have a temporary
windows form console, which is fairly complicated and which was
developed in VS2003. I installed VS2005 on an XP OS and tried to see
how much work it's going to be to convert over to 2005. I converted the
app, tried to compile and resolved all the warnings. One had to be
resolved by changing the LIB environment variable.

So I fix those and actually compile and run the app and on the line
where tracing is started:

TextWriterTraceListener(File.Create(fixedFileName) ));
I get an unhandled exception which seems to be saying it can't load
System.xml which doesn't seem to make a whole lot of sense:

{"Could not load file or assembly 'System.Xml, Version=2.0.0.0,
Culture=neutral, PublicKeyToken=b77a5c561934e089' or one of its
dependencies. Unspecified error (Exception from HRESULT: 0x80004005
(E_FAIL))":"System.Xml, Version=2.0.0.0, Culture=neutral,
PublicKeyToken=b77a5c561934e089"}

"Configuration system failed to initialize"

Source "System.Configuration"

Does anyone have any idea of why this might be occurring?