There's a difference between the framework target version, and the language version. It sounds like you are using new language features, and targeting .NET 3.0 or 3.5; that's fine, but you'll need to use a compiler that understands those language features.
Basically, use MSBuild 4 (or whatever the current version is). You can still target .NET 3.0 with that. Alternatively, limit yourself to older language features. There is a dialog in Visual Studio for selecting which language version a project should let you use (or there is for C# projects, at least):
Note: I do not know if VB provides a similar option to help you limit yourself to a particular language version.
Specifically, I suspect the language feature here is "auto-implemented properties" - if you insist on using an older compiler, you'll have to use the long-hand syntax.