VSS is a tool for storing and managing files, but editing or compiling files is done in a folder that you specify for VSS to use. This folder is called a working folder. A working folder can be an existing folder or a new folder that VSS creates for you. VSS Explorer displays your working folder path above the list view.
A working folder is set per user, per project, per machine. If Joe works on projects $/SpreadSheet and $/WordProcessor, he has two different working folders, one for each project. If Hanna works on the same projects, she has her own working folders for each project.
When you set a working folder for a project, you can set it for the entire project, including all subprojects under that project. You can, however, explicitly set a working folder for any subproject.
You must specify a working folder to perform any action that copies a file out of VSS, including the Check Out and Get Latest Version commands. When you attempt to use any of these commands without a working folder, VSS displays a message asking if you would like to set a working folder. If you choose not to set a working folder, VSS stops the command.
The only operation you can perform without a working folder is viewing a file. See Get and View Files and Projects for additional information.
For information on how to set working folders in VSS, refer to: