TeamCity built-in NUnit runner not reading app.config entries

Exactly as the topic header says. Our test projects maintain their own app.config and user.config files (app.config appSettings refer to user.config for active database connection strings and stuff which varies based on environment). The whole setup was working fine for last few months since our first installation of teamcity. Recently we upgraded to teamcity 6.0.3 and since then one of our major project's testproject integration tests are failing continuously as they can't read app.config's appSettings keys anymore for some reason. Just to let you know, so far we have verified the following points,

1. TestProjectName.dll.config exists in TC working directory's TestProject->Bin-Debug folder.

2. I tried running the tests from the assemblies in question using NUnit GUI separately and it works fine. GUI automatically picks up the TestProjectName.dll.config file as configuration file.

Tips or hints will be greatly appreciated.