What happens is, that during the build the SDK35ToolsPath is not set and so MSBuild uses the NETFX 4.0 Tools version. This in turn makes ResGen generate resources that point to the System.Drawing Version 220.127.116.11 assembly.
This all is caused by the fact, that HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\MSBuild\ToolsVersions\4.0\SDK35ToolsPath points to $(Registry:HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Microsoft SDKs\Windows\v7.1\WinSDK-NetFx35Tools-x86@InstallationFolder), but the Windows 7.1 SDK only installs the keys WinSDKNetFx35Tools and WinSDKNetFx35Tools-x64. Notice the missing dash and that there is no -x86 entry. The 7.0A SDK that ships with Visual Studio 2010 names its registry keys the right way.