Microsoft.mshtml.dll cannot be referenced in VS 2008 3.5 project

I am using VS 2008 and recently upgraded a project from .Net 2.0 to .Net 3.5. (thru the project properties page)
When doing this I checked the Client-only Framework subset option. When I compiled I had errors indicating that the compiler could not reference Microsoft.mshtml.dll.
When I checked the project references this one was marked with the asterisk.

Unchecking Client-only Framework subset option corrected the problem.

Andy