Default [Q] License errors for apps downloaded by WP7 Desktop MarketPlace

I am using the WP7 Desktop Marketplace tool and every time I download and deploy an app to the phone emulator, I get a "xx... license is invalid. Please purchase the product.". I tried all combinations of the replace signature and remove DRM checkboxes with same results.

Note: I am using unlocked version of emulator.

Why do I need to do to get downloaded apps working in the emulator?