Today I came to use my BizTalk 2010 development machine after not using it for a month or so. To my horror could not get any orchestration to start. I was getting the same behaviour and error that Bill Ousch reported. I tried Bill’s workaround but it did not work.
Now i was stuck. I ran up Fuslogvw.exe (Assembly Binding Log Viewer) and this showed that everything was failing when it tried to look up the Net 2.0.50727 machine.config. Now I am really confused why is BizTalk 2010 going anywhere near this file. I thought BizTalk 2010 used the net 4.0.30319 machine.config.
At this stage I was getting desperate and time was ticking by and I decided to run a repair of my BizTalk 2010 developer Edition from Program and features. This fixed the problem!!!