I've been having this problem as well, it started right after I had to reinstall windows. I've been trying to track down the issue (hoping it was something screwed up in windows), the error is coming from the MS Visual C++ 2008 distrib:
ERROR: Cannot resolve reference Microsoft.VC80.CRT,processorArchitecture="x86",publicKeyToken="1fc8b3b9a1e18e3b",type="win32",version="8.0.50727.6195".
ERROR: Activation Context generation failed.
Full pastebin available here: http://pastebin.com/a4Mm28SJ
I tried completely re-installing the game, the 2005 and 2008 VC distribs, and .NET. None of those work...
So, I was messing around in the FE install folder for steam (trying out some missing VC DLLs) when I noticed they have a redist folder with VC in there.
SOLUTION:
Go to your steam install folder (C:\Program Files (x86)\Steam\steamapps\common\Elemental Fallen Enchantress\redist) and install the two vcredist packages there.