unit test code compile fails


Compile fails for unit test code written in VS2005 that uses 1.1 versions of NUnit or MbUnit if using a VS project referanc.
steps to repro
create test project
add nunit/mbunit referance using referances/.NET
try and compile using msbee
If file is copied to project bin folder and referance changed then it works. I noticed that msbuild is excluding the nunit.framework.dll or mbunit.framework.dll referances when run through MSBee but ok when run normally.