I had to change "CopyLocal" to "true" for Microsoft.WindowsAzure.ServiceRuntime. Otherwise, my role would never leave the "Busy" state (it eventually failed completely. After using IntelliTrace, I saw it was saying it could not find this file).
I find this particularly odd, because I recall reading that you did NOT have to do this for this file since it was the main runtime. Also, when you create a blank cloud project in Azure, it sets this to "false." Is this a breaking change that was
introduced in SDK 1.7, or an anomaly in my configuration?
As far as i know, Azure SDK 1.7 does not requires Microsoft.WindowsAzure.ServiceRuntime reference's "CopyLocal" property must be "true", my test cloud application can be deployed success without "True" of "CopyLocal". Does your application works fine
if true but failed if false?
I suggest you check RoleEnvironmen.IsAvailable is true or false when application is running on cloud. And can you get any error message or trace message from Azure VM?