1. Download and Install the Air 2 Runtime and Air 2 SDK
The first step is to download the Air 2 runtime which installs itself within the operating system. The second step is to download the Air 2 SDK, which downloads as a zip file. Assuming you have Flex 2, 3, or 4 installed, there should be a plugin sdks directory that contains an AIR runtime folder such as:

1. Go to 'C:\Program Files\Adobe\Adobe Flash Builder 4\sdks'
2. Create a new folder '3.5.0 + AIR SDK'
3. Copy over content of '3.5.0' to '3.5.0 + AIR SDK'
4. Copy over content of downloaded AIR SDK to '3.5.0 + AIR SDK'
5. In Flash Builder, go into Project > Properties > Flex Compiler
6. Select 'Configure Flex SDKs'
7. Click 'Add', browse to '3.5.0 + AIR SDK' created above, and call it 'Flex 3.5.0 + AIR SDK' and check it.
8. Select 'Flex 3.5.0 + AIR SDK' for 'Use a specific SDK'

In short, the app-descriptor for my application (such myApplication.xml) requires that the namespace reference xmlns be changed from

http://ns.adobe.com/air/application/1.5
to http://ns.adobe.com/air/application/2.6

Once you change the version number, the application will compile and run without issue.

if not in your app.xml file add following line in your application tag

<supportedProfiles>extendedDesktop</supportedProfiles>