If you have a High availability solution enabled for Team Foundation Server 2010 using application tier NLB or if you are using Fully Qualified Domain name for your TFS 2010 instance and if you enable SharePoint after the initial configuration (ie, during the initial installation of TFS 2010, SharePoint was not integrated but later you decided to enable SharePoint in your TFS instance) you might receive this following error:
This is due to a security feature that is enabled in Windows 2003 Sp1 and above. Per this feature, If the server is referenced by a FQDN or a customer Host header, then the web service call will fail with an authentication failure. For more details check this Microsoft knowledgebase article: http://support.microsoft.com/kb/896861
There are two workarounds mentioned in the knowledgebase article mentioned above, both of them should help fix the issue. If you are following method 2 of the workarounds suggested, the server would need a restart.
Author: Arun Ramalingam
Reviewed by: Lakhminder