Do the SF tools only work when the business objects are a project within the solution?
No. The looks through all references associated with the project. So if you do not have a reference to the BO library, then they will not show up. Also, there are times that Visual Studio may try to hold on to the previous assembly within the AppDomain. You may get out and come back into Visual Studio if you do in fact have a reference to your new BO library. This is a very common task and something that is done every day. In fact, this is what we do ourselves.