You may experience this issue when you try to update sharepoint 2010 workflow using SPD.If you are building a workflow activity on WSS for SPD you may have to update your activity DLL regularly. Some times SPD does not recognize your changes in dll. so you might have to clear your workflow activity cache from system folder.
1. Close your Sharepoint Designer. 2. Navigate to "My Computer" 3. Then go to - %System Drive%\Documents and Settings\%user%\ Local Settings\ Application Data\Microsoft\WebSiteCache. - %System Drive%\Documents and Settings\%user%\Application Data\ Microsoft\Web Server Extensions\Cache 4. Search for the folder that looks similar to the name of the website. 5. Delete the assembly with the name similar to the one you are changing. 6. Start SharePoint designer. 7. This should solve your cache problem.