Invalid list value for State field while adding or editing Bugs in TFS 2010 Beta 2

Question

I am trying to create/edit work items through the TFS API in my Windows application. I get an error "Invalid list value for State field" when I try creating a new Bug itself. The process template has been only slightly modified from the "MSF for Agile Software Development v5.0 - Beta2" process template. \

Shouldn't it accept "Active", "Resolved" and "Closed" as mentioned in the bug.xml file? Below is its contents:

<?xml version="1.0" encoding="utf-8"?>

Describes a divergence between required and actual behavior, and tracks the work done to correct the defect and verify the correction. Stories affected and how Test context, provided automatically by test infrastructure How to see the bug. End by contrasting expected with actual behavior. The person currently working on this bug The area of the product with which this bug is associated The iteration within which this bug will be fixed Discussion thread plus automatic record of changes Change on reviewing, fixing or verifying the fix. Active = not yet fixed; Resolved = fix not yet verified; Closed = fix verified. The reason why the bug is in the current state Business importance. 1=must fix; 4=unimportant.
Assessment of the effect of the bug on the project Work first on items with lower-valued stack rank. Set in triage. The build in which the bug was fixed The build in which the bug was found

</FIELDS>
<WORKFLOW>
  <STATES>
    <STATE value="Active">
      <FIELDS>
        <FIELD refname="Microsoft.VSTS.Common.ResolvedDate">
          <EMPTY />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ResolvedBy">
          <EMPTY />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ResolvedReason">
          <EMPTY />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ClosedDate">
          <EMPTY />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ClosedBy">
          <EMPTY />
        </FIELD>
      </FIELDS>
    </STATE>
    <STATE value="Resolved">
      <FIELDS>
        <FIELD refname="Microsoft.VSTS.Common.ClosedDate">
          <EMPTY />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ClosedBy">
          <EMPTY />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ResolvedReason">
          <WHEN field="System.Reason" value="Fixed">
            <COPY from="value" value="Fixed" />
          </WHEN>
          <WHEN field="System.Reason" value="Deferred">
            <COPY from="value" value="Deferred" />
          </WHEN>
          <WHEN field="System.Reason" value="Duplicate">
            <COPY from="value" value="Duplicate" />
          </WHEN>
          <WHEN field="System.Reason" value="As Designed">
            <COPY from="value" value="As Designed" />
          </WHEN>
          <WHEN field="System.Reason" value="Cannot Reproduce">
            <COPY from="value" value="Cannot Reproduce" />
          </WHEN>
          <WHEN field="System.Reason" value="Obsolete">
            <COPY from="value" value="Obsolete" />
          </WHEN>
        </FIELD>
      </FIELDS>
    </STATE>
    <STATE value="Closed" />
  </STATES>
  <TRANSITIONS>
    <TRANSITION from="" to="Active">
      <REASONS>
        <REASON value="Build Failure" />
        <DEFAULTREASON value="New" />
      </REASONS>
      <FIELDS>
        <FIELD refname="Microsoft.VSTS.Common.ActivatedBy">
          <COPY from="currentuser" />
          <VALIDUSER />
          <REQUIRED />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ActivatedDate">
          <SERVERDEFAULT from="clock" />
        </FIELD>
        <FIELD refname="System.AssignedTo">
          <COPY from="currentuser" />
          <VALIDUSER />
        </FIELD>
      </FIELDS>
    </TRANSITION>
    <TRANSITION from="Active" to="Resolved">
      <ACTIONS>
        <ACTION value="Microsoft.VSTS.Actions.Checkin" />
      </ACTIONS>
      <REASONS>
        <DEFAULTREASON value="Fixed" />
        <REASON value="Deferred" />
        <REASON value="Duplicate" />
        <REASON value="As Designed" />
        <REASON value="Cannot Reproduce" />
        <REASON value="Obsolete" />
      </REASONS>
      <FIELDS>
        <FIELD refname="System.AssignedTo">
          <COPY from="field" field="System.CreatedBy" />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ActivatedDate">
          <READONLY />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ActivatedBy">
          <READONLY />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ResolvedBy">
          <COPY from="currentuser" />
          <VALIDUSER />
          <REQUIRED />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ResolvedDate">
          <SERVERDEFAULT from="clock" />
        </FIELD>
      </FIELDS>
    </TRANSITION>
    <TRANSITION from="Resolved" to="Active">
      <REASONS>
        <REASON value="Test Failed" />
        <DEFAULTREASON value="Not fixed" />
      </REASONS>
      <FIELDS>
        <FIELD refname="Microsoft.VSTS.Common.ActivatedBy">
          <COPY from="currentuser" />
          <VALIDUSER />
          <REQUIRED />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ActivatedDate">
          <SERVERDEFAULT from="clock" />
        </FIELD>
        <FIELD refname="System.AssignedTo">
          <COPY from="field" field="Microsoft.VSTS.Common.ResolvedBy" />
        </FIELD>
      </FIELDS>
    </TRANSITION>
    <TRANSITION from="Resolved" to="Closed">
      <REASONS>
        <DEFAULTREASON value="Fixed" />
        <REASON value="Deferred" />
        <REASON value="Duplicate" />
        <REASON value="As Designed" />
        <REASON value="Cannot Reproduce" />
        <REASON value="Obsolete" />
      </REASONS>
      <FIELDS>
        <FIELD refname="Microsoft.VSTS.Common.ActivatedDate">
          <READONLY />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ActivatedBy">
          <READONLY />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ResolvedDate">
          <READONLY />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ResolvedBy">
          <READONLY />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ClosedDate">
          <SERVERDEFAULT from="clock" />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ClosedBy">
          <COPY from="currentuser" />
          <VALIDUSER />
          <REQUIRED />
        </FIELD>
      </FIELDS>
    </TRANSITION>
    <TRANSITION from="Closed" to="Active">
      <REASONS>
        <REASON value="Reactivated" />
        <DEFAULTREASON value="Regression" />
      </REASONS>
      <FIELDS>
        <FIELD refname="Microsoft.VSTS.Common.ActivatedBy">
          <COPY from="currentuser" />
          <VALIDUSER />
          <REQUIRED />
        </FIELD>
        <FIELD refname="Microsoft.VSTS.Common.ActivatedDate">
          <SERVERDEFAULT from="clock" />
        </FIELD>
        <FIELD refname="System.AssignedTo">
          <COPY from="field" field="Microsoft.VSTS.Common.ResolvedBy" />
        </FIELD>
      </FIELDS>
    </TRANSITION>
  </TRANSITIONS>
</WORKFLOW>
<FORM>
  <Layout>
    <Group>
      <Column PercentWidth="100">
        <Control FieldName="System.Title" Type="FieldControl" Label="&amp;Title:" LabelPosition="Left" />
      </Column>
    </Group>
    <Group>
      <Column PercentWidth="50">
        <Group Label="Status">
          <Column PercentWidth="100">
            <Control FieldName="System.AssignedTo" Type="FieldControl" Label="Assi&amp;gned To:" LabelPosition="Left" />
            <Control FieldName="System.State" Type="FieldControl" Label="&amp;State:" LabelPosition="Left" />
            <Control FieldName="System.Reason" Type="FieldControl" Label="&amp;Reason:" LabelPosition="Left" />
          </Column>
        </Group>
      </Column>
      <Column PercentWidth="50">
        <Group Label="Classification">
          <Column PercentWidth="100">
                <Control FieldName="System.AreaPath" Type="WorkItemClassificationControl" Label="&amp;Area:" LabelPosition="Left" />
                <Control FieldName="System.IterationPath" Type="WorkItemClassificationControl" Label="&amp;Iteration:" LabelPosition="Left" />
          </Column>
        </Group>
      </Column>
    </Group>
    <Group>
      <Column PercentWidth="100">
        <Group Label="Planning">
          <Column PercentWidth="33">
            <Control FieldName="Microsoft.VSTS.Common.StackRank" Type="FieldControl" Label="Stack Ran&amp;k:" LabelPosition="Left" NumberFormat="DecimalNumbers" MaxLength="10" />
          </Column>
          <Column PercentWidth="33">
            <Control FieldName="Microsoft.VSTS.Common.Priority" Type="FieldControl" Label="&amp;Priority:" LabelPosition="Left" />
          </Column>
          <Column PercentWidth="33">
            <Control FieldName="Microsoft.VSTS.Common.Severity" Type="FieldControl" Label="Se&amp;verity:" LabelPosition="Left" />
          </Column>
        </Group>
      </Column>
    </Group>
    <TabGroup>
      <Tab Label="Details">
        <Group>
          <Column PercentWidth="50">
                <Control FieldName="Microsoft.VSTS.TCM.ReproSteps" Type="HtmlFieldControl"
 Label="Steps to Repro&amp;duce:" LabelPosition="Top"  MinimumSize="(100,200)"  Dock="Fill"/>
          </Column>
          <Column PercentWidth="50">
                <Control FieldName="System.History" Type="WorkItemLogControl" Label="&amp;History:" LabelPosition="Top" Dock="Fill" />
          </Column>
        </Group>
      </Tab>
      <Tab Label="System Info">
            <Group>
              <Column PercentWidth="50">
                <Control FieldName="Microsoft.VSTS.Build.FoundIn" Type="FieldControl" Label="&amp;Found in Build:" LabelPosition="Left" />
              </Column>
              <Column PercentWidth="50">
                <Control FieldName="Microsoft.VSTS.Build.IntegrationBuild" Type="FieldControl" Label="In&amp;tegrated in Build:" LabelPosition="Left" />
              </Column>
            </Group>
            <Control FieldName="Microsoft.VSTS.TCM.SystemInfo" Type="HtmlFieldControl" Label="System I&amp;nfo:" LabelPosition="Top" Dock="Fill" />
      </Tab>
      <Tab Label="Test Cases" >
          <Control Type="LinksControl" Name="TestedBy" Label="Test &amp;Cases testing this Bug:" LabelPosition="Top">
          <LinksControlOptions>
            <WorkItemLinkFilters FilterType="include">
              <Filter LinkType="Microsoft.VSTS.Common.TestedBy" FilterOn="forwardname" />
            </WorkItemLinkFilters>
            <WorkItemTypeFilters FilterType="include">
              <Filter WorkItemType="Test Case" />
            </WorkItemTypeFilters>
            <ExternalLinkFilters FilterType="excludeAll"/>
            <LinkColumns>
              <LinkColumn RefName="System.ID" />
              <LinkColumn RefName="System.WorkItemType" />
              <LinkColumn RefName="System.Title" />
              <LinkColumn RefName="System.AssignedTo" />
              <LinkColumn RefName="System.State" />
              <LinkColumn LinkAttribute="System.Links.Comment" />
            </LinkColumns>
          </LinksControlOptions>
        </Control>
      </Tab>
      <Tab Label="All Links" >
            <Control Type="LinksControl" Name="GeneralLinks">
              <LinksControlOptions>
                <LinkColumns>
                  <LinkColumn RefName="System.ID" />
                  <LinkColumn RefName="System.WorkItemType" />
                  <LinkColumn RefName="System.Title" />
                  <LinkColumn RefName="System.AssignedTo" />
                  <LinkColumn RefName="System.State" />
                  <LinkColumn LinkAttribute="System.Links.Comment" />
                </LinkColumns>
              </LinksControlOptions>
            </Control>
      </Tab>
      <Tab Label="Attachments">
        <Control Type="AttachmentsControl" LabelPosition="Top" />
      </Tab>
    </TabGroup>
  </Layout>
</FORM>