Are you sure that you are using .Net Framework 3.5 for this?
Can you send the command line output when you try to run this command?
-Anand
Best regards,
Phil
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Based you the information below, it seems that you are using the appropriate version of MSBuild. Now, can you confirm that you C++ project is compiled using the same version of .net Framework?
i.e. do you have project in your solution which are compiled using different version of .net Framework?
I don't think that adding it to system path will help. See if you can do what Alex has suggested. That should point you in the right direction.