I seem to remember in a web solution demonstration that I saw, that you kept copying the DLL’s for the referenced BO project from the BO project to the website project each time he made a change to the BO’s and built them. It seems to me that the right way is to reference the BO project from the web project but each time it tries to get the new copy of the DLL from the BO project, I get an Access Denied error and I have to manually delete (using the file system) and then manually copy the files to the right bin folder to get the reference to update.

Am I correct to reference the BO project or is copying them manually the right way to update the reference when needed?

If you reference the DLL on disk, you will have to manually copy the file each time the business objects change.  If you reference the BOLibrary project, then VS will automatically take care of building and copying the DLL to the \bin directory.  However, like CT said, if you are running the website from within VS, manually copying the DLL can only be done when the development server is stopped (which doesn't happen when you stop a debug in VS... it only happens when you right-click the server icon in your systray and click "Stop").  Obviously, when you publish your website, this information changes... the DLL always has to be copied out to the \bin folder on the webserver, and I'm not sure if VS will copy it out there automatically or not.