TL;DR; Explains how to configure Team Foundation Server to create SharePoint 3.0 project portals as sub-sites, including manual and automated setup steps and key considerations.

This subject goes back over a number of posts:
I will try not to reiterate all that has gone before, but I was trying to get the Project Creation Wizard for Team Foundation server to create project portals as sub sites to an existing Sharepoint 3.0 site, and not as top level sites under a “managed path”.
This has proved a bumpy ride and I would like to share with you my solution. First I would like to air some of my assumptions and results:
To support this as an automated process you would need to:
[If I have missed a step, let me know]
As a stepping stone to creating this process I have implemented an interim solution:
Although this is a manual step you need to visit the site anyway to add permissions for users. This way, all of the project portals have the same permissions as the parent site.
This works for us for a number of reasons; firstly only two users have permission to create projects; secondly we have a small total number of projects; thirdly we are not creating projects every day, not even every week. This led us to the opinion that our volume would need a major increase to require spending the time implementing the automated approach.
Works for us: Would it work for you?
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