I installed the VS2008 SP1 on our server, and couldn’t connect to the TFS anymore.

As I was in the process of installing more software updates, I didn’t immediately realize which update caused these problems.

So I googled on the error message: “TF30059: Fatal error while initializing web service”

and luckily others had the same issue and posted the solution: Install TFS 2008 SP  *sigh*