Following the correct procedure provided under http://support.microsoft.com/kb/839861, the application is working as expected now.
All I had to do was to change the "Pre-build event command line" as follows:
CD "$(ProjectDir)Resources"
FOR /D %%1 IN (*) DO (
CD "%%1"
resgen.exe "Strings.%%1.txt" "MyClassLibrary1.Resources.Strings.%%1.resources"
if %errorlevel% == 0 (
al.exe /t:lib /embed:"MyClassLibrary1.Resources.Strings.%%1.resources" /culture:"%%1" /out:MyClassLibrary1.resources.dll
if not exist "$(TargetDir)%%1" md "$(TargetDir)%%1"
move /Y "MyClassLibrary1.resources.dll" "$(TargetDir)%%1"
)
CD ..
)
Hope it helps someone.