I was working with the latest CRM 2011 SDK using VS 2012 and when i was creating a workflow for MS Dynamics CRM, i got an error while trying to connect to the CRM. Here is the error message:
Principal User is missing prvReadSolution privilege
To fix the problem, follow below steps:
1) Login to your CRM.
2) Select Settings tab.
3) Click on Administration and then click on the Security Roles icon, or if you assigned the permissions to the user directly then open the permissions tab for the user you are using to login to the CRM from VS 2012.
4) Click on the customization tab.
5) Look for the solution list item and set the read permissions only.
6) Click on Save and Close.
7) Try to connect from VS 2012, you will be able to connect with no issues.
Hope this helps.