VS 2012 Update 2 - precompiling ASP.NET 3.5 site problems

Hi, hoping someone has a solution to this one....

I have an ASP.Net 3.5 site that has had no problems with precompiling on VS 2005, 2008 and 2012, however precompiling after Update 2 for 2012 just won't work - VS2012 goes through the motions, files are created, but those files, when copied to the live environment kick up the dreaded 'sys is undefined' error.

A colleague who hasn't installed the update can precompile the exact same solution, without any errors being created.

I realise Update 2 has introduced more control over the publish process, but I'm obviously missing some setting that is automatically included pre-update2.

Help!