Well, this thread is like a month old and I'm suprised there are no answers yet...
Anyway, I did finally get it to work, but not really the way I want:
For the first time, I did a standard install for the latest dnn 4.3.4 on the dev machine...
Set it up just like everything else is...and it worked, let me register, sent an email, the whole 9 yards.
So this seems to be only happening when I set it up from visual studio 2005. This isnt a cure, but I'm hoping it narrows it down enough for someone to get this error to repeat and find a work around. I really want to run this from visual studio 2005 if possible, but the latest default setup for vs.net 2005 gives this error message and is a bug as far as I can tell.
Thanks, any suggestions for work arounds or fixes are much appreciated.