VSTS2008 has, on occasion, lost it's source control settings - specifically, the bindings to TFS server for a given solution and it's projects.
This seems to be because the solution and project files are not being updated when you use the TFS Source Control Explorer to do a 'Get Latest' - a 'feature' of VS2008 which allows you to work disconnected/offline - however it seems to have an issue trying to reconnect itself.
To resolve we simply removed the local source directory and did a 'Get Specific Version - get latest'.
RickSW had a similar experience.
Tim