If you get this error message when either trying to run your application or deploying to it… don’t worry, there is a very easy solution. Just go to C:\Documents and Settings\<User>\Application Data\Microsoft\Device Emulator and delete all files located there. That’s it, now you can try again and the error should not appear.
This error appears when the saved state on the emulator contains corrupted data and then when trying to run the emulator again loading of these corrupted data fails. I have experienced this error after trying to load unsupported/corrupted .dll files.