In addition to what Gino said, here are some things to check:
1. The custom trace listener class should be decorated with the ConfigurationElementType attribute.
2. The custom trace listener class should inherit from the CustomTraceListener base class.
3. If your custom trace listener is placed in an assembly that has been previously loaded before in the config tool, it won't be reloaded again and thus the copy of the assembly won't get updated to the version that contains the custom trace listener.
The simple workaround would be to close and re-open Visual Studio.
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