I'm trying to get my head around enabling notification on creating a new work item. Is it as simple as turning on the out of the box alert or is there more to it?

At it's most basic I want the person who is assigned a work item to get an email when the work item is created.

Hi Lou, well it can be that simple as check the project alert you say, but this is very simple scenario, it will only send the email to the address you put in the textbox, for the scenario you want, which is send the mail based on the assigned field on the work item, you will need to create a webservice which will be waiting for the event of work item creation (WorkItemChangedEvent).

I will try to explain it more clearly, there are some events TFS raises on some conditions, one of the is the WorkItemChangedEvent which is launched on creation or modification of Work Items, you can create subscriptions to this events, they can be done with email, which are the simple ones you say, or webservices subscriptions, where you create a Webservice which has a "Notify(string eventXml)" webmethod, which will be called on the event launch, this webmethod recieves on the Xml the information of the event (in your case the work item data), and you can send mail, or whatever you want.

I'm trying to resume, there are several samples on blogs, and also on the forum and MSDN, I also would recommend you download the Visual Studio 2005 SDK, which has more info and samples about the eventing service.

Sorry I forgot I have a link with an article on this topic: http://staff.southworks.net/blogs/mariano/archive/2006/04/14/411.aspx