It took two different forum posts for me to get this working, so this deserves permanent blog recognition. The key was that Visual Studio 2008 doesn’t have a concept of TFS “Collections” so you have to help it by providing the URL to the exact collection you are connecting to. Not sure what the URL is? Open up the collection in VS 2010 and copy the URL property in the Collection Properties. Here are the steps from the forum post:
To connect to TFS 2010 using VS2008, you need to install the below components in mentioned order. The Installation order is really important to make it work.
As TFS2010 introduces the notion of Team Project Collections. After the installation is completed successfully, you should provide the entire URL to connect TFS2010 server.
You can express the connection string as follows:
http://<serverName>:<port>/<vdir>/<collectionName> (e.g. http://TfsServer:8080/Tfs/ProjectCollectionName )
The <vdir> is an optional path for the TFS web sites specified by the administrator during setup. By default it is “tfs”.