Uninstalling Power Commands corrected the problem.

Here are steps to replicate the problem with Power Commands from the system
setup indicated at the top of this thread.

1. Install Visual Studio 2008 Power Commands.
2. Open Visual Studio 2008
3. Select File > New Project > Visual C# > Office > 2007 > Outlook 2007
Add-In.
4. Choose the default name and then OK.
5. Select Build > Build OutlookAddIn1.

The Output dialog will open, display a line, and then Visual Studio will
abruptly close.

6. Now close Visual Studio
7. Uninstall Power Commands
8. Open Visual Studio
9. Follow steps 2 through 5.

The Outlook Add-In project will build successfully.

Since I was able to replicate this a couple of times, I’m confident that
this problem is directly related to Visual Studio 2008 Power Commands.