After some research I found this answer which makes sense:
WPF and FIPS
Here are the contents of the link just in case it is removed:
The following is the reply I got from the WPF XAML team:
We didn’t fix it because this issue was discovered days (June 2, 2008) before the release.
I still have the BBPack I didn’t checkin. Here is the comment from the code.
// The Federal Information Processing Standard mandates that
// MD5 is obsolete and not safe for cryptographic checksums.
// We are using it to coordinating source files for debugging
// not authenticating so MD5 use is OK here.
// But, on a OS with the FIPS compliant switch ON, the managed
// MD5CryptoServiceProvider Ctor will throw. So we can't use it.
//
// Currently we use a PInvoke wrapper to the Native layer;
// which still works, even on a FIPS compliant machine. A Better
// fix would be to move to the approved SHA checksums, but that
// will require co-ordination with VS and the Debugger groups etc.
The MSI builder and a few other tools also threw on a FIPS=1 machine.
So even we if we fixed our part (in 3.5sp1), the customer’s end-to-end solution was still broken.
General FIPS info:
http://support.microsoft.com/kb/811833/en-us