So I got this yesterday as I went to do a test deployment to a clone of our production server and couldn't for the life of me figure out what was wrong...until I remembered getting this months ago when we first started developing this app on VPC.
The fix in this case was pretty simple - assuming the XAP file is named correctly and doesn't have any non-DOS friendly characters in it, just remember to add the new MIME type to IIS to handle the XAP extension. I must have scratched my head for about 20 minutes before I realized that was my only problem on the new server. Hopefully this saves someone else a little time.