How do I diagnose "Microsoft .NET ClickOnce Launch Utility has stopped working"?

I think I have identified the problem, although I don't know how it happened. Comparing current project file with a version that worked showing, amongst other changes, these differences:

from this:

<GenerateManifests>true</GenerateManifests>

to this:

<GenerateManifests>false</GenerateManifests>
<TargetZone>LocalIntranet</TargetZone>
<ApplicationManifest>Properties\app.manifest</ApplicationManifest>

If I remove TargetZone and ApplicationManifest, and set GenerateManifests to false - it works.

Did you change the application from Full Trust to Partial Trust? That's what it looks like. The Intranet zone is part of the partial-trust security. Look in the Security tab of your project property pages.

Second, in the Application tab of your project property pages of "Icon and manifest" -- what is the value of the manifest field? Is it Create Application Without a Manifest? Try setting it to "Embed manifest with default settings" and see if that helps.