I have had a similar experience - having just installed VS.Net beta 2.
I have been using Interdev for local projects just fine (Win NT), but VS.Net installs Frontpage2000. This had the effect of 'turning off' the 'Server Extensions' against the local host.
Try running Internet Service Manager, or the Frontpage Admin tool and 'install' the FrontPage Server Extensions against your local host (PWS).
It whinged when I tried this becase I had set the default 'home' page to be in a virtual directory (ie not c:/inetpub/
This is easy to do, and to correct, via the Personal Web Manager (double click the PWS icon in the system tray).
You may ask: Why use (or what is) FrontPage Server Extensions? Well, they provide two facilities - firstly the ability to perform File commands over HTTP (file copy, compare etc.) and as such it is a very comprehensive file upload tool [by NOT using FTP it is 'easier' to set-up - particularly with firewalls]. The second, less used, facility is a number of 'bots' which simplify some tasks (Menu Navigation bar etc.).
NOTE: The File Copy part of FrontPage Server Extensions is used by SourceSafe version control.
(Content Management)