First I can confirm we have a bug regarding the "Invalid cast" error message. This is bug 101274 and is actively being worked on.
I have found that a TFS build will copy the .aii file to the drop folder automatically. You don't need to set it to "Copy always". The .dll is also a generated file and the TFS build should also copy this to the drop folder.
What are you using to launch your tests? i.e. how are they getting started?
the Telerik team