MonoDevelop, adding a reference to 3rd party dll

Ok, this is bizarre and I hope somebody can help me. I downloaded a 3rd party library to help with some xml serialization.
In MonoDevelop I went to Project->Edit References.
Under .Net Assembly I browsed to the file and clicked the Add button. It is now in my list of Selected references. I clicked OK to close the Edit References window.
In my .cs file I add the namespace to my using clauses. As I type, it finds the namespaces and prompts me for them in intellisense.
I go down to my code and add the objects and classes I need. Again, intellisense finds everything and it all works great.
I go to Build → Build All. Everything compiles with no errors. Yay!
So, I go over to Unity and click the Play button… “All compiler errors have to be fixed before you can enter play mode”. Say what? The error says the namespace of the .dll I am referencing cant be found. Yes, yes it can. WTF? I go back to Mono and build all again. Everything builds, no errors. I go to Unity and click Play…“All compiler errors …”

Clearly Mono added the reference, clearly it can find the .dll and inspect the classes inside, and clearly it can compile. But it can’t play. I’ve been fighting this for 2 days, and I’m hopelessly confused. It works every time, but it doesn’t work every time.

Please tell me somebody can help.

Monodevelop is just a fancy texteditor with debugging texteditor.
But unity has to know all the dlls and have to be able to build with ít.
Did you have you dlls added to your unity project?