I've made some headway understanding the problem. This seems to be an implication of migrating from .NET 4.0 to .NET 4.5:
http://blogs.msdn.com/b/webdev/archive/2012/10/23/cryptographic-improvements-in-asp-net-4-5-pt-2.aspx
I resolved the problem by removing the IsolateApps setting for the validation and decryption keys in the machineKey settings like this:
Old:
New:
Do I need to be concerned about any adverse effects by doing this?
Thank you.