LAME is free, but numerous patent holders claim it infringes their intellectual property when compiled. The authors of LAME have claimed that it can be distributed in source form as the source is just an educational description of the technologies. That doesn't seem like a watertight argument to me, but the patent owners obviously aren't willing to risk that a court might be convinced by it as they have not initiated legal proceedings.
The LAME team recommends that anyone compiling their software and distributing it in binary form as a part of another product first obtain licenses for the patents. The asking price for those licenses appear to be $2.50/unit, which is obviously a big problem for free software.
And, since it's not .NET, including it in a .NET project would require distributing it in binary form.