I was collecting links & pointers to answer common questions in forums related to TFS eventing and thought of posting them as FAQ. I hope to update this post as I find new interesting information for common questions.
What is TFS evening and how it works?
  Eventing is a notification mechanism when items change in team foundation server. The notification could be email or a soap call, and the filter criteria could be set in an expression. VSSDK has detailed document on its design and how it works. To view it: Download vssdk from http://msdn.microsoft.com/vstudio/extend/. In the SDK, look at “Team Foundation Eventing Service.doc” document under “VisualStudioTeamSystemIntegration\Team Foundation Core Services” folder.
How to set alerts in UI?
How to create custom subscriptions?
  If alerts given in UI is not enough, custom subscriptions can be created. It can be done using
    1) Using Powertools Integrated in TE: http://blogs.msdn.com/bharry/archive/2008/07/08/july-08-tfs-power-tool-preview.aspx has details & screenshots
    2) BisSubscribe.exe tool: This can be obtained from VSSDK under "VisualStudioTeamSystemIntegration\Utilities\Event Subscription Tool" folder, or in team foundation server installed location "<Program Files>\Microsoft Visual Studio 2005 Team Foundation Server\TF Setup"
    3) Using APIs: See end of article at http://staff.southworks.net/blogs/mariano/archive/2006/04/14/411.aspx for using IEventService.
For step-by-step instructions and documentation, Subodh Sohoni has nice documentation at: http://www.sohoni.info/documents/ 
How to create custom subscription expressions?
  For work item tracking, version control and builds: Checkout powertool to do it at http://blogs.msdn.com/bharry/archive/2008/07/08/july-08-tfs-power-tool-preview.aspx

I subscribed, but do not get emails:
  - Check if event names have right case.   http://blogs.msdn.com/psheill/archive/2006/03/16/552941.aspx . Use this tool to create subscription to avoid such errors. If event name is misspelt, there will be an error in BisSubscribe, though the error is not intuitive.
  - If you are filtering by project, check the fieldname for project. It is PortfolioProject for WorkItemChangedEvent and TeamProject for other event types.
  - Check email address validity. Check if outlook rules are placing mails in wrong place (I made this mistake once and wasted time trying to troubleshoot)
  - Turning on tracing and troubleshooting: http://blogs.msdn.com/psheill/archive/2005/11/28/497662.aspx
  - Email issue? Testing SMTP pipes: http://blogs.msdn.com/psheill/archive/2005/11/22/495863.aspx . Check SMTP configuration in msdn help http://msdn2.microsoft.com/en-US/library/ms400808.aspx
Getting notifications to a webservice:
Few posts that walk through how to do it and solutions for common needs
You have a client box and cannot run webservice? Here is cool idea to use a TCP listener bound to a port instead: http://blogs.msdn.com/mrod/archive/2006/09/18/761174.aspx 
Few links on subscription:
  Pete developed eventing subsystem and has many posts on it: http://blogs.msdn.com/psheill