Today we published a KB article for a recently discovered issue when upgrading from TFS 2005/2008 to TFS 2010.  This issue exhibits symptoms in both merge and labels – from the KB:

• Labels that were created before the upgrade are entirely empty.  Labels could be also have incorrect contents.
• The merge wizard in Visual Studio does not display all valid merge targets for a given source path/branch.
• During merging, merge candidates are shown for changes that were already merged prior to the upgrade.

If you’ve experienced any of these symptoms following an upgrade to TFS 2010, please check out the KB article: http://support.microsoft.com/kb/2193796

We’re also in the process of releasing a hotfix for the issue for any customers that have not yet upgraded to 2010 that will fix the issue.  When the hotfix is available, the KB will be updated, and I’ll post back here as well.

Update, 6/17 – The hotfix is now available on Code Gallery: http://code.msdn.microsoft.com/KB2135068