When does the .csproj file get updated?

I open my solution file in VS2010, right click on a project, go to the build tab and switch the .NET framework from (say) 4 to 2. Then I do a save all. But my .csproj doesn't change - it still says

<TargetFrameworkVersion>v4.0</TargetFrameworkVersion>
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Why is this? And what do I have to do to get this line to update?

Right-click on your project from within VS2010, select Properties and set the Target framework to .NET Framework 2.0. VS will close/reopen the app and you should be good to go. I'm not sure what you mean by to go build but you shouldn't have to explicitly click Save All.