Arghhhh!!! Not again. But don’t worry I also got this error and now I figured out the solution.
When I was installing VS 2013 I unselect the sdk for WP 8.0 because I think now onwards I am not developing for 8.0 and the reason is WP 8.1 but it doesn’t work out as I think. After I install Xamarin I didn’t get windows phone project (.winphone) in fact VS was suggesting me to install sdk for wp8.0. One reason that Xamarin does not create wp8.1 project is because Xamarin.Forms was released before wp8.1. Then I install 8.0 sdk and immediately create blank Xamarin.Forms project and I was happy winphone project was also created and I try to build project then I got this ERROR. I start to fetch online help and go some few discussions in Xamarin forums which is really helpful. Then I reinstall VS update 4 (only) after that it works fine. Hope this will help you.
Thats it. 🙂