Getting error in Visual Studio 2010 when adding entity data model

I am getting the following error while adding entity data model using visual studio 2010.

Mistake:

could not resolve mscorlib for target environment ".NETFramework version-v4.0". This can happen if the target framework is not installed or the framework is not formatted correctly.

I found a post about this issue but was unable to resolve this error. One post says to reduce the length of the path. I did this for my project in c-drive c ( i.e-C:\ASP project\Registration

), but still the error was there. Another post had instructions to go to the Visual Studio project menu, then properties and add the target framework there. When I followed this step, it asked me to install .NETFramework 4.0, I did it but was unable to resolve this error. So please help me to resolve this error.