This came up again, so I'm posting the solution, which is from the web.config file.

You can see below, there are multiple System.Web.Extensions entries in my web.config file:
<compilation debug="true">
            <assemblies>
                <add assembly="System.Design, Version=2.0.0.0, Culture=neutral, PublicKeyToken=B03F5F7F11D50A3A"/>
                <add assembly="System.Core, Version=3.5.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/>
                <add assembly="System.Web.Extensions, Version=3.5.0.0, Culture=neutral, PublicKeyToken=31BF3856AD364E35"/>
                <add assembly="System.Xml.Linq, Version=3.5.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/>
                <add assembly="System.Data.DataSetExtensions, Version=3.5.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/>
                <add assembly="System.Web.Extensions, Version=1.0.61025.0, Culture=neutral, PublicKeyToken=31BF3856AD364E35"/>
                <add assembly="System.Web.Extensions.Design, Version=1.0.61025.0, Culture=neutral, PublicKeyToken=31BF3856AD364E35"/>
                <add assembly="System.Web.Extensions.Design, Version=3.5.0.0, Culture=neutral, PublicKeyToken=31BF3856AD364E35"/>
                <add assembly="System.Windows.Forms, Version=2.0.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"</assemblies>
        </compilation>

Removed all duplicates, and it no longer saw compilation error.

Now, my web.config file looks like this:

<compilation debug="true">
            <assemblies>
                <add assembly="System.Design, Version=2.0.0.0, Culture=neutral, PublicKeyToken=B03F5F7F11D50A3A"/>
                <add assembly="System.Core, Version=3.5.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/>               
                <add assembly="System.Xml.Linq, Version=3.5.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/>
                <add assembly="System.Data.DataSetExtensions, Version=3.5.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/>
                <add assembly="System.Web.Extensions, Version=3.5.0.0, Culture=neutral, PublicKeyToken=31BF3856AD364E35"/>
                <add assembly="System.Windows.Forms, Version=2.0.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/></assemblies>
        </compilation>