This is the typical behavior of Visual Studio. It just references the assemblies from the Global Assembly Cache where the binaries point to the installation folder (of course the installer adds the binaries to GAC).
Steven, try controlling that behavior by changing the properties of the assembly references as in the screenshot posted by Kiran. I believe the HintPath property should help you point to the location of the binary you need. I found this MSDN page
as a good resource on the topic (check the file references chapters). There are probably other good resources available as well.
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