I think that if you spend enough time writing code in Visual Studio, sooner or later you will come across this error.
I got this error after changing WCF reference configuration to include generation of asynchronous methods
Next time I went to update references, the error pops up. Cleaning up the solution or deleting all temp files VS creates did not help. What actually solved this problem was starting IDE at the command prompt with ResetSkipPkgs switch like so:
devenv /ResetSkipPkgs
Like many other developers I came across this problem when running projects from network shares. Unfortunately following MSDN solution did not solve the problem for me 
However, Chris Dunaway (a member of MSDN Forums), posted this caspol line that worked just fine
caspol -m -ag All_Code -url file://server/share/* FullTrust -n SecurityGroupName
MSDN solution adds a new code group as a child of LocalIntranet_Zone, so this didn’t work for me. However, the line above adds a new code group to All_Code node and this I believe fixed the problem.
Now, whether I open a solution from a UNC path or a mapped network drive of the added file://server/share/* path, I have no “The Project Location Is Not Trusted” warning.
PS
I was using VS2005 SP1 running on Vista Bussines Edition
