I was using the right information. I guess the VS2010 dlg box for adding a server is just faulty. When I typed the full url by hand it connected fine.
It is very misleading to be presented with a dialog with all the same knobs as the connection info for codeplex and its not working! Cost me a couple of hours searching the internet and trying other stuff when in the end its very simple. Very frustrating.
You could help by adding a manual/setup instructions for the VS2010 Team Explorer. Because when I looked it only had information for VS2005 and VS2008 available.
Anyway, thanx for checking back.