I received this error when opening an edmx file in my ASP.Net MVC 3 project. Spent several hours to figure out. Another related problem I had was that the “ADO.Net Entity Data Model” project template did not appear when adding new item to the project. Spent several hours finding a solution & finally found it here: http://stackoverflow.com/questions/5696436/no-entity-data-model-edmx-template-with-visual-studio-2010-sp1-ado-net-entit
Installing “ADO.NET Entity Framework Tools” from Visual Studio 2010 media solved both the problems mentioned above.