Good luck with getting this one fixed, people have had issues with it since the demo. It is a serious development fault, and one which ED can't seem to fix.
Oh and just for info, the SxS files you showed above are for side-by-side loading of assemblies, and it is here that LOMAC will look for the DLL first.
Could you tell us, whilst employing the local hack, the version number of the faulting msvcrt.dll module?