I also got this error when I moved an entity framework edmx file into a "Models" sub-folder. This automatically changed the metadata in my connection string setting in my app.config.
So before the connection string changed... it looked something like this:
<connectionStrings>
<add name="MyDbEntities" connectionString="metadata=res://*/MyDb.csdl|res://*/MyDb.ssdl|res://*/MyDb.msl; ...
</connectionStrings>
And after... it added the "Models" subfolder name (btw... it also added "Models" to the namespace for the EF classes generated) and the connection string now looks something like this:
<connectionStrings>
<add name="MyDbEntities" connectionString="metadata=res://*/Models.MyDb.csdl|res://*/Models.MyDb.ssdl|res://*/Models.MyDb.msl; ...
</connectionStrings>
I have a website project that references this Entity Framework DB project. But its web.config did not have the updates to the connection string... and that's when I started getting the compilation error being discussed here.
To fix this error, I updated the connection string in the web.config in the website project to match the app.config in my EntityFramework project.