>Hay gang,
>
>Recently I started using VS 2010 (.NET 4.0). I opened a copy of a VS 2008 (3.5) project in VS 2010 and walked through the upgrade wizard. (By the way, make your own backup, and don't let the wizard do it. Cause the compiler to get confused.) Anyway, Everything went smoothly. I thought. But when I started to try and use something new namespaces that came with .NET 4.0, all the dialog (namely Add Reference) still indicate the project is a .NET 3.5. Can someone please point me some documentation describing how to truly change the project to be a 4.0 project.

I think you are confusing VS2010 and .NET 4.
If you open a VS2008 (or earlier) *solution* in VS2010 it will update the solution files to VS2010 format. But it doesn't change the target .NET version for individual projects within that solution. If you think about it that might be a dangerous supposition - projects might be used in other solutions and still need to target a different version. To change the targetted .NET version for a specific project open its properties window, Compile tab / Advanced Compile Options... button and change the Target framework there.