Had the same problem today, installing a .NET 4 based application both on a Windows XP SP3 and Windows 2003 Standard. On another Windows XP SP3 I had no issues.
So I thought that the problem was about configuration.
I found that the working machine had .NET 1.x, 2.0, 3.0, 3.5 and 4 installed.
The not-working machines had only 1.x and 4, instead.
Installed .Net 3.5 (that, as Microsoft says, contains updates for both 2.0 and 3.0) and it worked, without touching the Postgres install!
I'm curious to try to install it on a VM (I had the same problem, in the past, but I thought it was something involved with the VM itself...), I'll do as soon as I get some spare time.