Problem solved. I was able to resolve the problem by running the DACProjectSystemSetup_enu.msi installer found on the VS2010-SP1 ISO under the root directory. You might also need to re-install DACFramework_enu.msi and TSqlLanguageService_enu.msi.
I believe the problem was created as a result of installing SQL Server 2008 R2 after installing VS2010.