The lobby was programmed for .NET v2.0 but it seems with the .NET v4 installer that they decide to leave out the v2.0 runtimes or there are problems with backwards compatibility..
Downloading and installing one of the following (depending on OS) should fix it:
.NET Framework v2.0 Redistributable (x86)
Use this if you have a 32-bit OS
http://www.microsoft.com/downloads/deta ... laylang=en
.NET Framework v2.0 Redistributable (x64)
Use this if you have a 64-bit OS
http://www.microsoft.com/downloads/deta ... layLang=en
If you don't know if you have a 64-bit version of Windows, just go to My Computer and open C:\. If you see BOTH the "Program Files (x86)" and "Program Files" folders then you have a 64-bit version.