HRESULT 0x80070057 on web server - asp.net

We have a web site (.net 3.5) hosted on IIS, its been working fine for a long time. Now suddenly we are getting the following error when user try to access the main site.

Exception information: 
Exception type: HttpException 
Exception message: Could not load file or assembly 'AjaxControlToolkit, Version=3.5.40412.0, Culture=neutral, PublicKeyToken=28f01b0e84b6d53e' or one of its dependencies. The parameter is incorrect. (Exception from HRESULT: 0x80070057 (E_INVALIDARG)) 

Stack trace:    at System.Web.Compilation.BuildManager.ReportTopLevelCompilationException()
at System.Web.Compilation.BuildManager.EnsureTopLevelFilesCompiled()
at System.Web.Compilation.BuildManager.CallAppInitializeMethod()
at System.Web.Hosting.HostingEnvironment.Initialize(ApplicationManager appManager, IApplicationHost appHost, IConfigMapPathFactory configMapPathFactory, HostingEnvironmentParameters hostingParameters)

No changes has been pushed to web server.

I have done some research on this but people are talking about deleting asp.net temp files from the local machine but this issue is on the windows web server.