WaveFormatConversionStream uses the ACM codecs installed on your computer. It starts by asking if any ACM codec is installed that can convert from source to target format. It would seem that you are missing an MP3 codec on the target machine.
NAudio offers another way to decode MP3s using DMO MP3 Decoder (DirectX Media Object), which can also be on your target computer. To use this, you need to get the latest NAudio source from Codeplex and to MP3FileReader (which now performs PCM conversion for you), you take the following line:
decompressor = new AcmMp3FrameDecompressor(this.Mp3WaveFormat);
and replace it with
decompressor = new DmoMp3FrameDecompressor(this.Mp3WaveFormat);
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