I'm not entirely sure what you can do to sort the first problem since you're saying that you've checked that the output path is set. Also, if it compiles for your colleague and you haven't changed anything I don't see why it won't for you (sometimes you get issues with references, but I don't think that's the case here). Strange. Worst case you could create a new project and add all the files and references again, but that would be a pain, and potentially difficult if it's source controlled.

About the MSBuild issue, it seems to indicate that there's some problem when it's trying to load the 'Microsoft.Build.Engine' assembly. Some times this can happen if you have multiple versions of an assembly and it tries to load an incompatible version of it. I'm not sure how this could be the case however. You could try re-installing the MSBuild stuff (not sure if you can do this without re-installing Visual Studio).

Sorry I couldn't be more help.

ac