Xamarin Studio: F# project does not work with message "Build failed. MSBuild operation failed"

Followed installation instruction from http://fsharp.org/use/windows/ to install F# using option #2. Installation was not smooth (could be because of my internet connection). Retried several times with few workarounds (delete corrupted files, install files manually, etc).

Tried to create a new F# project with all default values, running it failed with the message

Build failed. MSBuild operation failed
Build: 1 error, 0 warnings

Took me several days (tried several minutes a day to check logs, tweak settings, etc). Finally found a workaround. In Project | [project] Options | Main Settings, ensure that "Use MSBuild build engine (recommended for this project type) is unchecked.

Tags:
F#
Xamarin Studio
Windows 8.1