Correct, I double checked that our ASP.NET worker process has Full Control over the assembly location folder an the Temporary ASP.NET Files folder as well.
Please specify what you mean when you say that "Referencing the source assembly over the network could be your problem." That is our configuration but should be supported and should work fine. That's the way a Web farm is normally configured, meaning that we get all content and assemblies from a UNC path across the network.
By the way, here is the more detailed .NET Assembly Loader (Fusion) log of the assembly load failure. I have confirmed that the path where it expects the file exists, is accessible, and the assembly does exist there:
*** Assembly Binder Log Entry (3/24/2009 @ 1:45:59 PM) ***
The operation failed.
Bind result: hr = 0x80070002. The system cannot find the file specified.
Assembly manager loaded from: C:\Windows\Microsoft.NET\Framework64\v2.0.50727\mscorwks.dll
Running under executable c:\windows\system32\inetsrv\w3wp.exe
--- A detailed error log follows.
=== Pre-bind state information ===
LOG: User = PUBLIC\srvc-msdforganon
LOG: DisplayName = 3889AC4AF542BAC3C62ABB154E78FEA8, Version=0.0.0.0, Culture=neutral, PublicKeyToken=null, processorArchitecture=MSIL
LOG: Appbase = file://pubausclu1/msdforg/public/
LOG: Initial PrivatePath = \\pubausclu1\msdforg\public\bin
LOG: Dynamic Base = C:\Windows\Microsoft.NET\Framework64\v2.0.50727\Temporary ASP.NET Files\root\d67ebb2b
LOG: Cache Base = C:\Windows\Microsoft.NET\Framework64\v2.0.50727\Temporary ASP.NET Files\root\d67ebb2b
LOG: AppName = 159854a6
Calling assembly : Telerik.DynamicWebServices, Version=3.6.1870.2, Culture=neutral, PublicKeyToken=dfeaee0e3978ac79.
LOG: This bind starts in default load context.
LOG: Using application configuration file: \\pubausclu1\msdforg\public\web.config
LOG: Using host configuration file: C:\Windows\Microsoft.NET\Framework64\v2.0.50727\Aspnet.config
LOG: Using machine configuration file from C:\Windows\Microsoft.NET\Framework64\v2.0.50727\config\machine.config.
LOG: Policy not being applied to reference at this time (private, custom, partial, or location-based assembly bind).
LOG: The same bind was seen before, and was failed with hr = 0x80070002.
ERR: Unrecoverable error occurred during pre-download check (hr = 0x80070002).