An error occurred while validating. HRESULT = ’80004005′, this error just came up when I’m trying to organize my .Net Project files in my Solution, I removed some of the projects and just use the compiled dll in referencing to the main Project. However, this error has appeared during rebuilding the setup project and it took some of my time to find the solution or the cause.
So, what I did was I removed all References from the Target Primary Output project and added them and rebuilding it again , 
that’s it no more errors.
“Thank you for reporting this issue. We were able to reproduce the problem and have identified the root cause. The problem is caused by cross-solution project reference between Solution1 and Solution2. From the attached project, the project “WindowsFormApplication1” in Solution2 references a project that is not in Solution2 (it references ClassLibrary1 from Solution1). To fix the error, the workaround is to copy the ClassLibrary1 project to Solution2 and re-add the reference to ClassLibrary1 within its own solution.
Project-to-project references only works within the same solution. If you have to split into two solutions and split the code for your class library into two projects, you need to also split the project that references the class library into two projects (one for each solution) in order to avoid project references outside the current solution.
I hope this helps.
Candy Chiang
Program Manager – Visual Studio”
For more information and explanation about this error just click here