.fx file will not compile in VS2010-Collection of common programming errors

I’m trying to load an example project and the .fx file throws a compile error at runtime.

x3206 'mul' implicit truncation

it’s for the line:

float3 normal = normalize(mul(IN.normal, matWorld));

I’m also getting:

x3035  global variable implicitly constant @

vGravity = mul(vGravity, matWorld);

This is a downloaded project so I assume the issue is with conversion. For reference the DL location is: http://www.xbdev.net/directx3dx/specialX/Fur/