A vexing issue for SharePoint developers is the need to have WSS installed on your development machine due to DLL dependencies. Anyone who has tried to compile a web part in a stand-alone environment has run across the following errors:
The dependency 'Microsoft.SharePoint.Security' could not be found.
The dependency 'Microsoft.SharePoint.Dsp' could not be found.
The dependency 'Microsoft.SharePoint.Library' could not be found.
To circumvent this issue, extract the underlying DLL's from the GAC and copy them to your local machine. You'll need to perform the copy from the command prompt as Windows Explorer does not expose the full directory structure for the GAC. Each DLL resides in a directory with a path similar to the following:
c:/windows/assembly/gac/[Strong Name]/[Version Number]__[Public Key]/[Strong Name].dll
Once you have the DLL's you can include them as a reference in your project and compile without errors.