[Update] As Tom pointed out in the comments, this issue is directly related to the encoding of my *.refresh file.  Thanks Tom.

I searched Google and other search engines with no success.  I found "MSB3095: Invalid Argument", and I found "Illegal characters in path.", but never in the same place.

I did not actually resolve the issue; I was able to work around it.  I have a website project that references some local projects as well as a couple of third party libraries.  I use *.refresh files to guarantee I get the latest version of the libraries from my dependencies folder.

Recently, I put together a library of extension methods and added it to my dependencies folder.  I added a new *.refresh file to my website.  Everything compiles fine on my desktop.  When I committed the changes, the build server responded with the MSB3095 error and failed compilation.

I remembered that I am using the extensions library in other projects with a direct reference.  It turns out I didn't need the *.refresh file at all.  The reference to my new library was inferred.

After removing the *.refresh file, the build server compiled the website without issue.

I still feel a little uncertain about this resolution.  I am using other refresh files.  What was wrong with this one?  I checked the path inside it and there was no problem with it.  The only thing I can imagine (though I have not tested) is that it may have something to do with my library having extra dots (.) in the name.  e.g.  MyCompany.Extensions.dll.refresh

If I discover something new I will update this post.