CSC Compile timeouts

I have recently moved my solutions from VS2010 to VS2013. When I test otherwise unmodified code on a Windows 2003 Server I start to get errors of this kind:

'Error occurred while compiling the script: Timed out waiting for a program to execute. The command being executed was "C:\WINDOWS\Microsoft.NET\Framework64\v4.0.30319\csc.exe" /noconfig /fullpaths @"C:\Documents and Settings\(user)\Local Settings\Temp\4wrw3tay.cmdline".'

The code has not changed, the server is the same. The only difference is that the code now is compiled in VS2013 and installed on the server by an msi built by InstallShield LE (earlier in VS2010 I used setup projects, *.vdproj).

I experience this error in 2 different situations:

1. XslLoadException in System.Xml.Xsl.XslCompiledTransform.LoadInternal(Object stylesheet, XsltSettings settings, XmlResolver 
2. When calling a web service through and old-fashioned web reference proxy. ExternalException in System.Xml.Serialization.Compiler.Compile(Assembly parent, String ns, XmlSerializerCompilerParameters xmlParameters, Evidence evidence)
   

I have been able to work around issue 2 by building and including the Xml Serialization assembly for the dll consuming the webservice. But so far I have no remedy for issue 1

Assistance urgently needed
Thx