After using the TFSAdminUtil.exe to point TFS Beta 2 to an existing WSS 3.0 farm. TFS do not use the path set correctly if the path is anything other than /sites.
TFS works correctly if SharepointSitesUri is set to http://somewssserver/sites, but does not work correctly when set to http://somewssserver/development/sites
We want to use an existing Sharepoint farm within the organisation and the path made available for use is http://wssserver/development/sites.
We think this url problem is also causing project creation to fail when configured to anything other than /sites for SharepointSitesUri