when you strat installing Team Foundation Server as a part of VS Team System edition,you have to know some tips:
1- the pre-requisites for FS (Foundatiuon Server) such as : SQL 2005,.Net 2.0,WSS 2.0.
2- create different accounts to be used by FS (one for FS and should be duifferent than the logged in user,plus one for using sql 2005 reporting services.)
3- configure e-mail notification (Alerts),by putting the SMTP Server.
IMPORTANT NOTE :
Since the WSS 2.0 is a pre-requisities to FS,WSS 2.0 is by default is installed on MSDE (MS Desktop Engine),YOU HAVE TO CHANGE THE WSS TO STORE CONFIGURATION & CONTENT DBs to the SQL Server DB,TO DO THAT YOU HAVE TO INSTALL .net 2.0 HotFix before installing wss 2.0.
contact me for any help regarding FS installation :)