The first thing that jumps out to me here is that your platform and configuration are being fused together to form "Debug|Any CPU" and a string is being made from that--the pipe is the character it's referencing there when it says there are illegal characters. I'm not sure how much your database project really differs with respect to debug/release and for architecture, but you may not even need to include them in the path.
Since you can't open the project property pages, you'll need to edit the msbuild directly by unloading it and selecting "Edit..." from the context menu (sorry if you know this already).
From there, assuming you're realling running up on the windows path length ceiling, you could use some msbuild trickery to maximize your headroom in there. Specifically, doing something similar to what you suggest: use the C:\ drive wherever possible.
To do this, look inside the PropertyGroups with the conditions for your Configuration & Platform configurations, and inside them replace the OutputPath and IntermediateOutputPath properties so that they're as short as possible, for example:
<PropertyGroup Condition="'$(Configuration)|$(Platform)' == 'Debug|AnyCPU'">
<OutputPath>$(SystemDrive)\D\A</OutputPath>
<IntermediateOutputPath>$(SystemDrive)\o\D\A</IntermediateOutputPath>
</PropertyGroup>
- This saves some valuable characters in that instead of "Debug" you're using "D", "A" for "AnyCPU" and "o" for "obj".
- Probably most importantly you're using C:\o\ for the intermediate build directory instead of C:\whatever-the-whole-path-is-to-your-project-file\obj. As well, this property isn't configurable from the property pages, from what I recall.
- Some added flexibility there using SystemDrive instead of a hard-coded C:, not that I would really expect it to be different.
Finally, concerning your property pages load problem, I don't know how the Debug|AnyCPU got in your path (I don't know of any properties that store the concatenated flavor like that), but you should be able to pick it out pretty easily once you open up the file. Hopefully it's similar to load errors in something like the winforms designer where you change one line and suddenly the whole thing works again.
Hope this helps!