First, workgroup is limited to 5 people so that path isn't available to you.
Second, and more importantly, why use TFS? (I don't ask this lightly as I am a very big proponent of TFS).
IF you decide to use TFS without purchasing the Team level visual studio products then, yes, you will need to buy a license for each TFS user which will be accessing the server. The license pricing varies, but I think it's around $450 (USD) per seat plus $2700 (USD) for the server itself in a single server installation. The Team products all come with those licenses which is why you don't have to buy them. You will need a license for anyone that accesses any type of reports, source control, etc.
The reason why I ask about why you want to use TFS is that if you are using VS Pro AND FogBuz then you are already throwing away most of the TFS features. What's left is simply source control and build management. Source control can be acquired for free with SVN and you could use something for build management like Cruise Control. Testing could be handled by nUnit.
The whole point in TFS is the fact that everything is integrated. So that when you do a check in you can tie that to a particular work item, etc. Reports are available for looking at check ins, work item tracking, bug tracking, etc.