You can customize the workitem type definition and for System.AssignedTo field, you could have something like:

<FIELD name="Assigned To" refname="System.AssignedTo" type="String">
<ALLOWEDVALUES expanditems="true" filteritems="excludegroups">
<LISTITEM value="[Project]\Project Administrators" />
<LISTITEM value="[Project]\Contributors" />
<LISTITEM value="Unassigned" />
</ALLOWEDVALUES>
<DEFAULT from="value" value="Unassigned" />
</FIELD>

For help in customizing steps: http://msdn2.microsoft.com/en-us/library/ms195023.aspx

Actually I encountered this error after making the above change: "TF20015: The field 'Assigned To' contains a value that is not in the list of supported values." when the Assigned To field shows "Unassigned". when I tried to add a new work item based the new template. I have the following state definition in addition to the definition of field above:

<STATE value="Created">
<FIELDS>
<FIELD refname="System.AssignedTo">
<DEFAULT from="currentuser" />
<VALIDUSER group="[Project]\Business Analysts" />
<ALLOWEDVALUES>
<LISTITEM value="Unassigned" />
</ALLOWEDVALUES>
</FIELD>
</FIELDS>
</STATE>

I want to limit to only the Business Analysts when an item is created. Likewise I want only the Developers group to be available in the Assigned To dropdown when the state changes to In Development. In addition, "Unassigned" should be available in very state.

The VALIDUSER key will restrict the values to users in that group, so you can try doing the below instead to use LISTITEM:

<STATE value="Created">
<FIELDS>
<FIELD refname="System.AssignedTo">
<DEFAULT from="currentuser" />

<ALLOWEDVALUES expanditems="true" filteritems="excludegroups">

<LISTITEM value="[Project]\Business Analysts" />
<LISTITEM value="Unassigned" />
</ALLOWEDVALUES>
</FIELD>
</FIELDS>
</STATE>

Naren:

I confirmed what you said above is working in my TFS now. Thanks a lot.

Now I have another issue. Consider the following transition:

<TRANSITION from="In Dev" to="Dev Complete">
<FIELDS>
<FIELD refname="System.AssignedTo">
<ALLOWEDVALUES expanditems="true" filteritems="excludegroups">
<LISTITEM value="[project]\Developers" />
<LISTITEM value="Unassigned" />
</ALLOWEDVALUES>
<REQUIRED />
</FIELD>
<FIELD refname="My.VSTS.Tax.Common.FixedBy">
<COPY from="field" field="System.AssignedTo" />
<VALIDUSER group="[project]\Developers" />
<REQUIRED />
</FIELD>
</FIELDS>
</TRANSITION>

I want Unassigned to be an option until an item is moved into the Dev Complete state. At that point I also want to set the FixedBy field with the value in AssignedTo. However, if I change the state to Dev Complete and change the Assigned To from Unassigned to a developer at the same time (that is, try to save both changes to gether), it gives an error saying: "The following fields are invalid: TTP Fixed By (ListValue). Save operation failed". Apparently TFS copies the old AssignedTo value to FixedBy rather than the new value.

My question is, is there a way to make to this work, that is, allow Unassigned until moving to the Dev Complete state and set the FixedBy value at the same time?

Thanks a lot
Bob