Missing file: Microsoft.UpdateServices.Administration.dll
You need to install the WSUS 3.0 SP2 Administration Console.
You need to explicitly install the WSUS Admin Console on the development machine (to reference it), and you must install the WSUS Admin Console on any machine that is intended to use your project.
The DLL is not licensed for redistribution, but it must physically exist on the local machine. The only way to get it (legally) is to install the WSUS Admin Console. The console requires the .NET Framework v2.0 and an authenticated connection to the WSUS server (i.e. the console machine and the WSUS server must have a domain trust relationship).
Source Windows Update Services Administration DLL
This file Microsoft.UpdateServices.Administration.dll
is also installed as part of Windows Server Update Services Service Pack 1:
Source Description of Windows Server Update Services Service Pack 1