Using 15.6 Preview 3
Result:
FS0084 Assembly reference 'C:\Users\Phillip Carter\source\repos\Library9\ClassLibrary1\bin\Debug\netstandard2.0\ClassLibrary1.dll' was not found or is invalid

Some other things to note:
cc @TIHan
It started magically working after I got halfway through this video.
Did this again with a Console app and .NET Standard library; still seeing the same error:

I watched that entire video from beginning to the end. 3 1/2 minutes of my life I won't get back.
Confirming that I still see this _without_ anything custom installed into my VS
Upon closing and re-opening the solution, the error in error list is not gone. Updating issue
@cartermp it just worked fine for me. Is there some steps, perhaps you missed from the repro?
Nope.
Next time you are in the office, can you bring in your laptop and show me pls.
Just got this now on a fresh .NET Framework console app referencing a fresh .NET Standard library:

This is on my desktop. I don't have a Windows laptop.
@cartermp could you please:
Still reproduces in 15.8. Manually reloading the .NET Framework project is required.
Fixed by #5698
Reopening as we need to slightly revert cross project referencing of CPS style projects in a legacy project; it causes worse issues such as tooling not working when you open a second solution.
Closing out, as support for the legacy projects is now frozen and all new .NET FX projects use CPS
Most helpful comment
I watched that entire video from beginning to the end. 3 1/2 minutes of my life I won't get back.