ex : System.IO.FileNotFoundException at startup (General questions)

Hi
I have dowloaded sftp.net component ver 2.0.2.0
added a referece in my project of it.
wrote very simple code in C#.
But the application is throwing following exception at startup
without executing even the first line of code.
Any help on this issue is welcome.
Regards,
Vishwajit Girdhari
----------------

Unhandled Exception: System.IO.FileNotFoundException: File or assembly name System, or one of its dependencies, was not found.
File name: System
at wodSFTPTester.Class1.Main(string[] args)

Fusion log follows:
=== Pre-bind state information ===
LOG: DisplayName = System, Version=1.0.5000.0, Culture=neutral, PublicKeyToken=b77a5c561934e089
(Fully-specified)
LOG: Appbase = D:wodSFTPTesterinDebug
LOG: Initial PrivatePath = NULL
Calling assembly : WeOnlyDo.Client.SFTP, Version=2.0.2.0, Culture=neutral, PublicKeyToken=305e8ab915f4f7a3.
===

LOG: Publisher policy file is not found.
LOG: Host configuration file not found.
LOG: Using machine configuration file from D:WINNTMicrosoft.NETFrameworkv1.0.3705configmachine.config.
LOG: Post-policy reference: System, Version=1.0.5000.0, Culture=neutral, PublicKeyToken=b77a5c561934e089
LOG: Attempting download of new URL file:///D:/wodSFTPTester/bin/Debug/System.DLL.
LOG: Attempting download of new URL file:///D:/wodSFTPTester/bin/Debug/System/System.DLL.
LOG: Attempting download of new URL file:///D:/wodSFTPTester/bin/Debug/System.EXE.
LOG: Attempting download of new URL file:///D:/wodSFTPTester/bin/Debug/System/System.EXE.