My application tag is as follows: <application xmlns="http://ns.adobe.com/air/application/2.0">
I even tried (same error result): <application xmlns="http://ns.adobe.com/air/application/2.02.12610">
adl.exe version 22.214.171.12410
From Add or Remove Programs(Win XP) Adobe Air's Version: 126.96.36.19910
Does this make any sense to anybody?
It sounds like you have a configuration issue with the SDK. Are you using Flash Builder? If so, please make sure you have the Flex SDK and AIR SDK installed correctly then in your FB project, verify you've set the Flex SDK version correctly in the Flex Compiler options.
Setting the application descriptor to <application xmlns="http://ns.adobe.com/air/application/2.0"> is correct.