I've come across this on a previous job. The project was a knowledge management system that kept track of previous consulting jobs they worked on (think of it as the IT dept of "bob bob" from the movie Office Space (and watching that movie was actually a job requirement of that department)). It ran on asp classic (this was in 2001).
Upon migrating to a new server, we discovered that accessing some of the 70k documents popped up a dialog box with 3 boxes: domain, user, pwd. My first guess, because it was based on the first problem found was that some of the files were owned by the LOCAL admin account on the now turned off server. Oops, the ACL contained SIDs that the new server didn't know. Ok. Write a script to run through the file system, look for files with either an unknown owner or a local account and take ownership with a domain account.
Problem solved? Hah. Next it turned out that since many of the offices of this multinational insulting company used pesky ferrner words, those silly accents and slashes through letters caused good old yankee asp classic to have a barf. Next, run through and identify those pesky european words. That took care of a thousand or so files that were popping up the same dialog box with 3 boxes: domain, user, pwd.
Problem solved? Not a chance. By now the screaming idiots were screaming to fire my fanny perpendicular, until I found that the remaining files had paths well in excess of 250 characters. I think the record was near 600. Darn those Germans for having long long long words. And darn that company for having a multilingual standard for keeping them organized. And darn that loudest crazy screaming idiot for using the filesystem to rearrange the files into places that the web front end could not manage.
The explorer shell back in Win98 days could handle 32k long paths, but the standard API calls all used ANSI/ASCII calls instead of the "wide" ones that could use that newfangled unicode stuff.
My point, and I'm pretty sure I had one when I started, is that this problem isn't new, and it isn't limited to the .NET framework. It is one of those pesky limitations you end up with when the creators of your filesystem and OS make assumptions about everyone only using ASCII and that nothing outside of America exists at all.