Sometimes technical, sometimes not, never a kitty

You may receive this error if:

1. you created a project in a pre-release Visual Studio 2008, and
2. your project contains DBML files (created by database designer, like when using LINQ), and
3. This is the first time you're opening the project in VS2008 RTM.

Fortunately, the answer is simple.  In the code view of the DBML file, you need to change the encoding from utf-16 to utf-8.

Thanks to Julie Lerman for the solution.  Some additional information at Converting web site projects from Visual Studio 2008 Beta 2 to Visual Studio 2008 RTM.