Cannot get latest BizTalk Services SDK (May 2) working?

... and you had a previous version installed? Try this (courtesy David Wortendyke):

• Uninstall the current SDK by running BizTalk Services SDK Setup.exe.
• Go to <WindowsDir>\Microsoft.NET\Framework\v2.0.50727\CONFIG and open machine.config. Go to the bottom and remove the <system.servicemodel> section and all its contents. You'll know it's the right section if you see the extensions for relayBinding and other "relay" related elements.
• Note that you should be careful editing this file. Consider making a backup first and verify you are deleting the right section.
• Use gacutil.exe /u <assembly> to remove ChannelFx.dll and Microsoft.ServiceModel.Relay.dll.
• Reinstall the current BizTalk Services SDK Setup.exe.

HTH.