I was incorrect in saying this was not a known issue. It is, see this post for details:
http://www.kinook.com/Forum/showthread.php?threadid=246.
An untested workaround would be to use a Process Files/Replace In File combination to replace all the escaped symbols with the non-standard xml (") that the non-standard parser used in the microsoft compiler requires [in all .csproj and .vbproj files]. This should work, however I can't ensure that any unintended consequences won't occur [specifically that other parts of these 'xml' files don't require an escaped " symbol].
The bottom line is that MS obviously isn't using their own xml parser in their C#/VB.Net file parser (which is what the Make VS.Net action in Visual Build Pro uses!).