How to Set a Working Folder
You must specify a working folder to perform any action that copies a file out of VSS, including the Check Out, Check In, Undo Check Out, Get Latest Version, and Merge commands.
To set a working folder:
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Select the project for which you want to set a working folder.
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On the File menu, click Set Working Folder to display the Set Working Folder dialog box.
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Select the drive with the folder that you'd like to use.
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In the Folders box, navigate down to the folder you'd like to use as a working folder.
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Click OK. The path to your working folder is displayed in VSS Explorer above the list view.