KB:MSBuild Unable to Located Nested csProj files on remote SLN
There is a known limitation with MSBuild when there is a referenced project has nested referenced project from another solution, MSBuild will fail but the same SLN will work fine from the Visual Studio IDE since VS works a little differently.
However, this could result in confusing behavior of its own: the not-in-solution project could be built multiple times (in parallel) with different configurations.
Since we currently build only once, adding the possibility of parallel builds (and just changing the configuration of the not-in-solution project) could break users, so we're unwilling to make this change now.
The current behavior can be worked around by explicitly specifying the configuration using SetConfiguration metadata or by adding the referenced project to the solution.
References:
https://developercommunity.visualstudio.com/t/projectreferences-dont-work-for-projects-outside-s/276809
https://github.com/dotnet/msbuild/issues/1556
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