Why did TFS Source Control break my prefabs/filesystem?

Facts:

• I'm working on a multiplayer game in Unity and C#

• As a requirement I need TFS Express for source control and ALM services.

• The TFS server is locally managed.

• I have a single test scene which houses a login and registration form.

What I did:

• Installed and configured TFS using base settings and a new collection.

• Configured my server side and shared code as a solution on TFS

• I filed the solution as a whole under the root workspace.

• I then added the Project\Assets folder using the Team Explorer as Client in the root folder of the project

• I worked on a validation library, killing about 5 hours.

• I returned to Unity, and found Missing Prefab links for everything in my form that was hooked to a prefab.

• Also all the scripts were missing that were associated with the project itself.

• My Assets in the Project\Assets\ folder were now in Project\Assets\Assets

• I reimported a dependency. Only the form components using vanilla settings from the dependency re-established themselves.

• I attempted the same thing for the prefab files I'd generated after customizing the vanilla versions. It didn't re-establish the link to the objects in scene.

• I deleted them and rebuilt half of the UI.

• I checked the Source Explorer and it had taken the base folder and replicated it into the Assets folder, partially.

I'm new to Unity, so the file system is a bit foreign, though I do know that there are GUIDs stored for each asset in a .meta file for each folder.

What happened? Why did the folder get moved locally when checking-in from a completely fresh repository? Is there a better way to handle it? Locally Publish and then Push for example? Why wasn't I able to reset the link by importing the assets again? How can I prevent issues of this nature in the future? Should I have checked in the whole project folder as opposed to just the Assets folder (Which brought up another set of issues, likely easier to work through ones however.)? Is there any whitepaper documentation on the file management system and/or Source Control in Unity? Is there a direct way to regenerate/reassign a guid to a prefab instance?