Visual Studio assembly reference details in Properties pane doesn't match what gets used for the build

Having lost a day to this, I post in the hope someone else gets their projects fixed sooner. Caveat: No idea which step fixed the issue.

Scenario

Large solution (~40 projects) containing multiple Azure services, all targeting Azure SDK 1.7
Another team member upgrades to Azure SDK 1.8
Now can’t deploy a working build to Azure as once up, site 500s with Could not load file or assembly ‘Microsoft.WindowsAzure.ServiceRuntime’ or one of its dependencies
- Everything still works just peachy locally, though
Right-click… Properties on a Microsoft.WindowsAzure.ServiceRuntime reference in any project, find that the version mentioned is 1.7.0.0 when we’re expecting 1.8.0.0
- Even though the .csproj file specifically says the reference is 1.8.0.0 and with a hint-path pointing the right way
- Where is VS2012 pulling this 1.7.0.0 from?
Run build with diagnostic-level logging to find 1.7.0.0 assembly being used in build process even though it’s not part of the .csproj file

Close Visual Studio
Find C:\Users\USERNAME\AppData\Local\Microsoft\VisualStudio\11.0\Designer\ShadowCache folder, delete all contents
Uninstall all Azure SDKs lower than 1.8, and any other associated libraries etc using Add/Remove Programs
Remove registry value at key HKLM\SOFTWARE\Classes\Installer\Assemblies\Global\Microsoft.WindowsAzure.ServiceRuntime,version=”1.7.0.0″…
Use gacutil /u to uninstall the 1.7 assembly from the GAC
Restart machine
Delete entire source tree from local disk and pull down again from source control
Clean solution
Rebuild all