I ran into a strange situation the other day. I'm not sure what did it because I had installed a bunch of stuff including a old version of Microsoft Visual Studio 2003. Then weeks later I got back into using the XNA Game Studio 3.1 on Visual Studio C# 2008. Well I tried to load my project and it gave me an error "The project file 'path to project' cannot be opened. The project type is not supported by this installation".

I tried opening many other projects and they all failed with the same error. So I uninstalled "Visual Studio C# 2008" and reinstalled a fresh copy, but no change same error was occurring. Then I uninstalled "Microsoft XNA Game Studio 3.1" and reinstalled a fresh copy and whala I was back up and running.

I did some more testing and found this error also occures when you do NOT have "Microsoft XNA GAme Studio 3.1" Package installed.