I tried to install Team Foundation Server 2010 on my laptop earlier today and encountered an error below:
Error [ Configuration Database ] TF255374: The following SQL Server instance is not compatible with Team Foundation Server: CK-PC. The default collation is set to Latin1_General_CI_AI. Team Foundation Server requires that the default collation be case insensitive and accent sensitive. You must choose a SQL Server instance whose default collation settings match these requirements.
Obviously one way to fix the problem seems to be rebuild the system databases with the required collation and re-install user databases. But it will take a while.
So the key takeaway is: if you need to use Team Foundation Server with SQL Server, find TFS' default collation first and then use the same collation when you install SQL Server.