There's a helpful FAQ posted in the ASP.NET forums regarding using Team Foundation Server with the newly released Web Application Projects for Visual Studio.

Issue 6 - Using TFS Team Build

Issue 6 - Using TFS Team Build
The May 2006 release of Web Application Projects supports building with Team Build on a Team Foundation Server (TFS). However, you will need to manually add the "Microsoft.WebApplication.targets" file to your Team Foundation Server for it to work.

  1. On the computer running Team Build, navigate to the "C:\Program Files\MSBuild\Microsoft\VisualStudio\v8.0" directory.
  2. In this directory create a "WebApplications" directory.
  3. Place the "Microsoft.WebApplication.targets" file in the "WebApplications" directory. This file can be found at the same location on your developer system that has been updated with the May 2006 release of Web Application Projects.

After performing these steps Team Build should be able to successfully build a web-project build with the new Web Application Project type.

Additionally, if you have an older version of a Web Application Project, you will need to add the WebApplication.targets line (shown in blue and bold) after the normal CSharp.targets or VBasic.targets line in your .csproj or .vbproj file (all new or newly migrated projects will have this line automatically).

<Import Project="$(MSBuildBinPath)\Microsoft.CSharp.targets" />
<Import Project="$(MSBuildExtensionsPath)\Microsoft\VisualStudio\v8.0\WebApplications\Microsoft.WebApplication.targets" />

Issue 7 - Using TFS Source Control

Issue 7 - Using TFS Source Control
There is a known issue with the enterprise source control system in the Team Foundation Server (TFS) which incorrectly identifies codebehind classes for .aspx. and .ascx files as folders.

To workaround, do not use "File/Source Control/Open from Source Control". Instead, manually get the solution using Team Explorer and open the solution from local disk.

This problem will be fixed in a future release of Team Foundation Server.