Special thanks to John Dundon at Microsoft for helping me resolve the issue. Here's what he said:
Thanks for all the details. This actually sounds like a quirky behavior
in VS that I think I can help you work
around.
I believe the reason it’s remembering
to use the local development server is
because it got stored in the SUO file.
So there are two possible ways to fix
this:
- Re-open your solution from source control as an administrator on the
machine with IIS installed and
everything should get downloaded to
its right place
- If you close VS, delete the SUO file (note – this will erase some
settings about the state of your
solution but shouldn’t cause any real
data loss), and then re-open the
solution, it should ask you to
re-download that particular web site
and will try to make it an IIS web
site again.
Note however though that since your
virtual directory already exists on
your machine, it’s going to ask you if
you want to use it – I’m assuming you
do, but it will overwrite any files
when it does.
Let me know if this works for you (and
while you technically shouldn’t need
to, it may be a good idea to back up
any work you’ve done in this
enlistment that hasn’t been checked in
prior to trying this).
I followed his advice and removed my SUO file and re-opened the solution. The website was automatically fixed as http://localhost/Website and it also checked out the .SLN file as well, and when I checked it in, it fixed the issue for other developers as well. Hope this solution helps out others as well with this quirky issue.