I was actually able to find what was causing the problems. A lot of other postings mentioned that PowerCommands can cause such issue due to interference with the Common Language RunTime. I don't have PowerCommands installed, but I had another add-in called DXCore for Visual Studio.NET. This was the application that was causing VS 2008 to crash at build. This add-in consists of 2 applications - CodeRush for Visual Studio.NET and !Refactor for Visual Studio.NET. I had !Refactor uninstalled previously but I wasn't aware that DXCore is still there. After removing this one as well everything started working like it should.