I found the 'solution' at
http://forums.microsoft.com/MSDN/ShowPost.aspx?PostID=2255240&SiteID=1
> Re: .NET Runtime version 2.0.50727.42 - Fatal Execution Engine Error
> (7C812A5B) (800703e9) while starting Visual Studio 2005 IDE Same problem
> here. Win XP Pro/SP2, IE7, .NET Frameworks 1.1 and 2.0 installed, MS
> Visual Studio 2005 (no SP1 installed), MS >SQL Server 2005 and Visual
> Studio 2005 Extensions for Windows Workflow Foundation installed.
>Reinstall of .NET Framework 2.0 did not help, but removal of Visual Studio
>2005 Extensions for Windows Workflow Foundation did >the trick. It seems
>like latest security updates somehow interfered with these Extensions and
>IDE could not load them. I suspect latest >security updates have mistakenly
>replaced an assembly which is a part of Windows Workflow Foundation
>Extensions.
>Thanks everybody for pointing this out.
> Fadil Mesic