I had this exact problem today on my Win7 Machine. As Hans suggests, 'Navigate to C:WindowsMicrosoft.NETFrameworkv4.0.30319 and type "csc".'
The file may still exist but if you can open it with notepad, it will probably show just plain text of some errors. This is the indication that your compiler has been destroyed. At my office we have come up with a theory that a Windows update may be causing this because only a few machines have been affected, but I haven't read much online about it until now.
We fixed this by copying someone else's csc.exe into the C:WindowsMicrosoft.NETFrameworkv4.0.30319 directory and recompiling. Be sure to set the options on the file to read-only so this won't happen again. Good Luck!
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