I have installed TFS on a server connected to a domain X using 3 local users accounts by names TFSSETUP, TFSREPORTS, TFSSERVICE. Using TFSSETUP account i loged in and created local user accounts. The following setups were followed for confguring the user account on TFS as on MSDN Site.

1. In Team Explorer, select the Team Foundation Server to manage.
2. On the Team menu, point to Team Foundation Server Settings, and then click Group Membership.
3. In the Global Groups dialog box, select the group to which you want to add users, and then click Properties.
4. In the Team Foundation Server Group Properties dialog box, on the Members tab, select Windows User or Group, and then click Add.

5. In the Select User Names or Groups dialog box, username of the users.

I then tried connecting to server using the TFS server local account from a client system which is connected to a domain named X but was unable to login.

We also tried adding the local user account to the local adminstrator group account and tried loging. This worked but I was told that local users in the TFS server must not be given adminstrator access.

Any solutions to this problem will be appreciated. Thanks.

If the local users have the same name and password as the domain user, the domain user should be able to connect without any login prompt.

A few other things you might want to check- which group did you add the users to? Did you click "OK" on the group membership dialogs before trying to log in as that user? Changes to the groups are not submitted until the dialog closes.

Cheers,
Adam