If you create a TS project in Visual Studio, check it in to TFS 2010 source control, create a build definition and queue a build, it will fail with the following error:

C:\Program Files (x86)\MSBuild\Telerik\WebUITestStudio\Telerik.WebUITestStudio.targets(9,5): error : Unable to determine the project namespace. Please make sure the settings file is available.

The work around is to add this pre-build command to the Test Studio project:

copy "$(ProjectDir)settings.aiis" "$(SolutionDir)"

This copies the required settings.aiis file to the solutions root directory where the build can successfully find it.

7/8/2013 update

The above work around does not work for this customer. The customer has Visual Studio 2010 installed on D: drive. We need to try to replicate this setup and see if we can reproduce the problem.