Add referenced data set to designer: Could not add an instance of prjData.dsMachineInfo to the designer. - DOTNET

In my solution I have two projects. One project contains windows forms and
other user interface stuff. The other project contains data classes and
typed data sets (.xsd).

I've referenced prjFrontEnd with prjData.

I am dragging a dataset object onto the form into design mode. I can select
a typed dataset from its current project, but when I click in the drop down
"Referenced Datasets" and then click the dataset from the other project
(which now show up in the drop down list) I get the following error message.
--
Could not add an instance of prjData.dsMachineInfo to the designer.

To resolve this problem, build the project, fix any errors, and add the
instance to the designer again.
--
I have done that, and there are no errors in either project but this error
will not go away.

Does anyone have any suggestions?