Couple of days ago I came across very weird issue on my new box – unit tests that were started (either from within Visual Studio or using MSTest command-line) would never complete. Test run would just hang pending forever.
Since I was running latest and greatest VS2008 with SP1, I have started blaming permissions first, and then new Windows bugs (since I was running Windows 7 build), and that did not help (does it ever?).
As it turned out, the problem was my computer name. It was all lower case (upper case does not exhibit the problem), and somehow that prevented unit tests run from ever completing (even without any TFS stuff – just plain unit tests). The workaround is to change the computer name (either using Computer->Properties, or by tweaking the registry if you cannot do it [for example, when computer is joined to a domain]). The steps are described in this helpful MSDN post.
Thanks for the workaround go to Ed Hintz.