Bellow Location has two Folders
C:\Program Files (x86)\Microsoft.NET\SDK\CompactFramework\
- v2.0
- v3.5
Check All Reference's paths in Solution Explorer. same version should be selected for all reference's from the correct folder as the version you selected on the time of Project creation.
As Windows CE forms are available in both Versions.
in v2.0 as Microsoft.WindowsCE.Forms
in v3.5 as Microsoft.Windowsce.Forms
If Started the Project with .Net v3.5 and added Reference of Windows ce forms from v2.0 folder. the OS will ask for .NET CF Initialization .