This is apparently a known issue in WP7 Mango beta 2 & RC and can make debugging that bit more interesting.
One tip is to look at the Call Stack and ensure that “Show Parameter Values” is ticked (off by default):
Also see this post for some more discussion. It suggests this happens when you are checking for all thrown exceptions (Debug –> Exceptions…).
Thanks for that. Got me past a very difficult phase. I just could nto get rid of this error.