I ran into this error today when moving to a new TFS Server. I found this page which had me close visual studio and run the following command from the visual studio command prompt:
The command "tf workspaces /remove:*" clears out all of the cached workspaces (it only affects the cache file). You can also specify "/s:http://oldserver:8080" to clear out only the workspaces that were on the old server
This worked like a charm, after restarting Visual Studio everything worked great.