The error message displayed by VS2010 would lead anyone to believe the issue is with trust and security and it is BUT, no amount of allowing full trust on the network drive will solve the problem.
What lead to the solution was first to port the project to VS2008 to find out if it would encounter the same problem. VS2008 was perfectly happy to run the project without complaint.
Then I converted the VS2008 project (which was working) to VS2010. VS2010 refused to build the project but this time the error message was different, referring to "remote assemblies" and to a link on MSDN, which led to the solution.
The real problem is that VS2010 considers an assembly on a network drive a "remote assembly" (the same as if the assembly were being loaded from a web site.) Caspol was not able to solve that problem (it seems it should have but, it may be my fault, I am not well versed in using Caspol).
To end this long story, the link provided in the error message is:
after following the instructions in that link to edit "machine.config", I changedto:
the project built successfully and ran without a hitch.
Thank you to Alison and CodeNaked for their efforts to help,
PS: it would have been rather nice if VS2010 had displayed the "better" error message initially. Instead, I had to port the VS2010 non working project to VS2008 where it worked and that one to VS2010 where I got the better error message that led to the solution.