In order to prevent the exception from being thrown, and to allow your SLP-protected executable to run on a machine that has FIPS enforcement enabled, you need to include a line in the app.config file for your application that looks like this:

<configuration>
    <runtime>
         <enforceFIPSPolicy enabled="false"/>
    </runtime>
</configuration>
 

This will instruct .NET not to inhibit enforcement of the FIPS policy in the case of your application. Note that this also applies to the Microsoft.Licensing.LicAdmin.exe binary that SLP includes in your files when it protects the application, so you also need to create an app.config file ("Microsoft.Licensing.LicAdmin.exe.config") for that binary as well, and include that same configuration setting if you are shipping the Administrator to your customers.

It is also possible to control this setting via Group Policy and/or the .NET machine.config file.