I kept getting a message from Visual Studio 2008 when opening a solution saying:
This solution contains a web site at 'http://localhost/Services'. There is already a web site at this location on this computer. Do you wish to use this existing location for your web site (existing files will be overwritten)?
It looks like the (one?) cause is a corrupt solution file.
Some of the properties associated with the solution could not be read.
The problem in that case was that there are multiple "GlobalSection(TeamFoundationVersionControl) = preSolution" sections in the solution file. This was true for my situation as well, and repairing the .sln file seems to have fixed the prompt about an already existing web site.
I originally tried editing the .sln file by hand to remove the duplicate section, but then I started getting the "Some of the properties..." message. I think it works better to use Visual Studio to unbind and rebind the source control.