I should have held off on posting this question. I have worked through and found the problem and solved it.
VS.Net does not fully trust network locations. In my case, my code and binary were being stored to a mapped network drive, so when I went to execute the binary, it would fail when it tried to initialize my first SQLDMO object. Solution for this: move the code to a local (C:\, etc) drive.
Solution number 2 (I like this one much better):
Goto Start|Settings|Control Panel|Administrative Tools|Microsoft .NET Framework (or 1.1) Configuration
This should get you set up so that VS.Net will trust your code stored on network storage.