System.Web is there, but seems Visual Studio doesn’t sort by name by default. You’ll need to click Component name column to get that list sorted.
I was able to run this code:
Console.WriteLine(System.Web.HttpUtility.UrlEncode(" ")); // +
Just adding a System.Web reference, without System.Web.Extensions.
Also, You should replace your target framework from .NET Framework 4 Client Profile to .NET Framework 4; go to Project >> Properties… >> Application tab