A deleted file of the same name already exists in this VSS project. Do you want to recover the deleted file instead of adding your local <File name>?

A file with the same name as the file you are adding to VSS was deleted but not purged from the database. The deleted file is still part of the project, it is just on the projects deleted list. Since two files of the same name cannot exist in the same project, VSS is giving you the option of recovering the deleted file or using the new file you are trying to add. In either event, the other file will be permanently replaced in the project.