If you’re using mage.exe directly to create an application manifest, and you’re seeing errors like this:

Warning MSB3178: Assembly <assembly> is incorrectly specified as a file.

and the assemblies flagged up are targeting .net 4, then you’re probably using the wrong (old) version. Try the one in C:\Program Files\Microsoft SDKs\Windows\v7.0A\bin\NETFX 4.0 Tools.