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I did not try to use Jason's XAMLCleaner, which seemed like overkill for my few references. Manually, I edited out the references to 10.0.0.0
xmlns:mtbw1="clr-namespace:Microsoft.TeamFoundation.Build.Workflow;assembly=Microsoft.TeamFoundation.Build.Workflow, Version=10.0.0.0, Culture=neutral, PublicKeyToken=b03f5f7f11d50a3a"
becomes
xmlns:mtbw1="clr-namespace:Microsoft.TeamFoundation.Build.Workflow; assembly=Microsoft.TeamFoundation.Build.Workflow"
As soon as I did this I could again reopen and edit the workflows with no warnings.
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Item 3) I soon discovered that even though the workflows looked good, and the builds completed without error, they were not completing the automated web deploy. The build output worked exactly as before. The bit that was not working was the deployment step. So I began exploring the various command line parameters and, as it turns out, the VS2012 publishing profiles are stored differently and need to be referenced differently.
Sandwiched between my DeployOnBuild and DeployTarget properties, I added /p:PublishProfile=mysite.com
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