Intermittently getting Loading this assembly would produce a different grant set from other instances. (Exception from HRESULT: 0x80131401) after .net 3.5 Sp-1

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If you happen to see following exception intermittently and that is corresponding to after installing .NET 3.5 SP-1

Server Error in '/login' Application.

Loading this assembly would produce a different grant set from other instances. (Exception from HRESULT: 0x80131401)

Description: An unhandled exception occurred during the execution of the current web request. Please review the stack trace for more information about the error and where it originated in the code.

Exception Details: System.IO.FileLoadException: Loading this assembly would produce a different grant set from other instances. (Exception from RESULT: 0x80131401)

Checking Event viewer you would end up with

Event Type: Warning Event Source: ASP.NET 2.0.50727.0 
Event Category: (3)
Event ID: 1309
Description:
Event code: 3005
Event message: An unhandled exception has occurred.
Process name: w3wp.exe
Exception type: Exception Exception message: An error occurred attempting to process your request. Loading this assembly would produce a different grant set from other instances. (Exception from HRESULT: 0x80131401)

Temporary workaround is to

Adding <trust level="Full" /> to your application web.config (It’s security hole).

Good news is that this issue is fixed in kb 963676 .

This would move base dll version from 2.0.50727.3603 ==> 2.0.50727.4005