I was reading a DNN manual called 'DotNetNuke Module Developers Guide' for developing new modules from scratch. The manual says to create a class library project and add reference to DotNetNuke project.
I do not find any such project in Community version source code for version 7.00.04. However, I can see DotNetNuke.Web and DotNetNuke.Web.WebClient projects but none that is called DotNetNuke.
There isn't a DNN project, but there is a DotNetNuke.dll, add a reference to that (the project I believe is DotNetNuke.Library)
I would also suggest taking a look at my Templates for DNN, they make doing module development easy http://christoctemplate.codeplex.com/