With the NuGet 1.8 release, we found a breaking change that caused NuGet to fail on Windows XP machines. Earlier today, we released a hotfix to NuGet 1.8 that addresses this.
We apologize for any inconvenience this issue may have caused. If you have further issues, please report them on CodePlex.
For more information, there is a CodePlex discussion thread for this issue, which resulted in a work item to fix the regression.
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