Are you able to browse for files in with the [...] button? That sometimes does not work in VSS due to a lot of reasons (mostly, VSS does not provide very parsable output). You can just try typing in the exact path to the file $/MyProject/MyProject.csproj. The error may be a result of the file not correctly at that path.

I managed to get the source provider set up correctly but am now having a problem creating an application. I create a new .net app, but on the Source Control step (step 3) after I fill in the 'Path of solution or project' and click next I get an unexpected error. "Could not find file 'C:\Documents and Settings<username>\Local Settings\Temp<systemname>'. " I suspect this is because I originally installed as 'local system' and it doen't have rights to create the temp folder or something like that, Can you advise if this is the case and how to correct?