So I ran into an issue with trying to connect a windows 7 development environment to VSS. There is a file access issue where you need full control instead of just read and write permissions. There are several posts other places for working around with this.
http://www.dotnetmonster.com/Uwe/Forum.aspx/vs-sourcesafe/2283/Access-to-file-lumiere-vss-data-rights-dat-denied
http://www.csharptalk.com/2010/09/access-to-file-vssdatarightsdat-denied.html
If you are constrained on editing user permission or connecting over a VPN then you can use a much simpler solution. You just need to set the compatibility of Visual Studio 2005 to run as administrator and Windows XP SP3.
This will keep the Windows 7 access restrictions from being applied to the file access checks. It will use the Windows XP access checks and you will be golden.
3bf1b7f8-78c5-4dae-8a01-e1c3fc7e92d3|0|.0
Visual Studio 2005