I found the solution to the problem although it's quite odd and may possibly be a bug with VS 2005. VS assumes %VSMYDOCUMENTS%\Addins is located in the same volume as VS application. My MyDocuments folder is in a separate partition with a different drive letter, which I changed in Windows. Almost all other application can find the MyDocuments on this drive. The solution was to add a path to mydocuments folder in TOOLS>Options>Add-in/Macros Security