[MonoDevelop] Monodevelop can't find system.dll from Mono 2.6.7?

[Chip Salzenberg]

I seek help with monodevelop, and the IRC channels are devoid of helpful
life.

Having installed Mono 2.6.7 (I was using .Net), I switched Monodevelop's
default .Net implmeentation to Mono.  So far so good.  But whenI loaded an
existing solution that I had used w/o trouble when on .Net, it could not
find system.dll.

How is Monodevelop supposed to find the base DLLs of Mono, and why would
that not be working?
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