Okay, I finally got it. This was fixed by running "Microsoft .NET Framework 2.0 Configuration" tool and Clicking on "Runtime Security Policy" and clicking the "Adust Zone Security" under "Tasks" in the right pane and increasing the intranet zone security settings.

 

Most likely I could have also used the "Increase Assembly Trust" settings instead.

 

I believe this is because I am doing development on one system with all my project files and assemblies on another.