Whew. I'm finally past this troublesome TFS project creation error. At first in my research, I discovered TFS is (somewhere... RegProxyFileCache.xml I think ) configured to look for WSS (Sharepoint) Admin at port 17012. Some folks identified a second install of WSS leads to the incorrect port for WSS ...thus causing a TFS project creation error. This was not the case for me. Finally, upon highly scrutinizing the project creation log file, I found an inner, inner, inner exception reading: Exception Message: The request failed with HTTP status 403: Forbidden. Checking IIS on the TFS instance for the "Sharepoint Central Administration" site, I opened the Directory Security tab. Sure enough, the "IP address and domain name restrictions" option was set to default deny and only granted to localhost (127.0.0.1). Ugh. Security. ;-) To resolve, I simply set the option to default grant. Project creation successful! I hope this helps someone avoid this issue.