Step 1: Create your VSS database if you don’t have one yet, preferrably on a file share that is backed up. You’ll have to add users as well.
Step 2: Install the VSS plug in.
Step 3: Create a new Eclipse project if you don’t have one yet. Go into VSS, create a new project, and check your files and folders into it. Alternatively, grab the root folder of your eclipse project and drag it into the $/ root folder in VSS. Let it check out your files.
Step 4: Delete the following files from VSS: *.class and .project. On your local filesystem, clear the read only bit (right click on the files in explorer and select properties)
Step 5: Right-click on your project in Eclipse. Select Team -> Share project. Select “VSS Configuration Wizard” and press next. Enter your username and password. Under VSS Directory, put the path to your VSS database (you can use the browse button). Leave the source dir as /. The Relative mount point can be tricky — $/ is the root, so it should be something like $/MyProject/. Press Next and Finish.
Step 6: Right-click on your project again. Under Team, select Refresh. Do the same again except select Update State.
Step 7 (Optional): Under window, select Other -> VSS Plugin menu and shortcut keys. This will add the VSS Plugin tab in your Eclipse perspective.
There you go — Eclipse should now be talking to VSS.
To check something out, right click on the file, and go Team -> Check Out. Alternatively you can just start editing the file and Eclipse will ask you if you would like to check it out.