When you open a project or solution from source control, Visual Studio downloads the latest version of the item and all contained files to your local working folder. After you retrieve a local copy of the item, you do not need to open it from source control again. You can proceed to use the source control commands from within Vault.
1. In Visual Studio, on the File menu, click Open.
2. Click Web Site.
3. In the Open Web Site dialog box, click Source Control to the left, then click Select Source Control Project.
4. Your Vault "Connect To Server" dialog will appear, log into Vault, choose your repository and then select your web project folder from the tree.
5. If you already have a local copy of the Web project you are opening from source control, you are prompted to overwrite the local copy of all files and projects in the solution. Respond to prompts as needed.
Update:
For those using Vault 4.0.x's "SourceGear Vault Visual Studio 2005 Client": This plug-in does not yet have support for Open Web Site. In order to open a Web Site from Vault, it must be in a Solution that was bound to the repository using the SourceGear Vault Visual Studio 2005 Client. Then the project can be opened by using File->Open From Vault to select the Solution from the repository.
How to open a Web Project from Source Control in VS 2005
Moderator: SourceGear