I have been moving to a completely virtural environment for the work I do out of my home. In that process I have set up a VirturalServer with TFS 2008 SP1 and a Dev image with VS Team Suite SP 1. Well I forgot to install the Team Explorer before I installed SP 1 on my dev box, and when I attempted to create a work item I got the following error.
"Could not load type 'Microsoft.TeamFoundation.WorkItemTracking.Client.WorkItemTypeDeniedOrNotExistException' from assembly 'Microsoft.TeamFoundation.WorkItemTracking.Client" exception
I saw a posting on Dan Sniderman's blog saying he had the same problem (http://blog.magenic.com/blogs/daniels/archive/2008/08/24/Fun-with-VS2008SP1-and-VPC.aspx). He said he had to do a complete reinstall to fix the problem. I was not looking forward to that so I tried just reinstalling SP1 for VS 2008 and things appear to be all better now.