This link is very good http://blogs.msdn.com/b/thompal/archive/2009/11/25/spsite-the-web-application-could-not-be-found.aspx for the error SPSite The Web application http://sharepoint could not be found.
The site is there and the error does not reflect the real problem.
I recapture the screen so if you are running a 64 bit machine then do change the Platform target to x64.
Beside that Microsoft.SharePoint.dll v.2.0.50727 does not support .NET version 4 for SPSite object. You need to revert it back to .NET Framework 3.5.