Symptoms

Unable to create new workflow from K2 designer. K2 designer crashes with number of errors being recorded in Event Log:

Event code: 3007
Event message: A compilation error has occurred.

Faulting application name: vbc.exe, version: 14.0.81.0, time stamp: 0x5584f0f2
Faulting module name: sSYSTEM32MSVCP120_CLR0400.dll!__crtGetFileInformationByHandle, version: 6.3.9600.18007, time stamp: 0x55c4c16b
 

Diagnoses

Based on the following error details from errors logged in Application Log "Faulting module name: sSYSTEM32MSVCP120_CLR0400.dll!__crtGetFileInformationByHandle" we were able to establish that this is an issue with Microsoft Updates documented in Microsoft KB:
https://support.microsoft.com/en-us/kb/3118750

When those updates:
3098779
3097997
Are installed on the system they may cause some issues if you have installed .NET 4.6 as they intended to .NET 4.6.1, and they also causing issues if there is no .NET 4.6 installed at all. As per MSFT KB, you either has to remove them or to install .NET 4.6.1.
 

Resolution

See Diagnosis section for details. You may resolve this issue by following instructions from Microsoft KB3118750.