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It seems that security setup is a bit of a nightmare with TFS --- particularily as it relates to TFS versus SharePoint versus Reporting Services.

Does anybody know of a tool that can validate the security setup --- because as it stands now, people can't create projects, because something is wonky with SharePoint --- yet all the farm administrators and site collection administrators seem to be set correctly.

+1  A: 

One thing to try is to create a new Team Project logged in to the TFS server (AT) using the account that you used to install TFS (tfssetup).

If that still doesn't work then sounds like you might possibly have your Sharepoint Admin URL set incorrectly in TFS.

One thing you might want to try if the TFS Best Practices Analyzer which comes with the TFS 2008 Power Tools and will point out common configuration issues.

You might also want to try the tfsadminutil ConfigureConnections /View command to see if you can see anything there.

Good luck,

Martin.

Martin Woodward