In VSS, you can delete only one instance of a file or project with a given name in a given project. This error has the following cause and solution:
You can click Yes to purge the old file, or No to cancel the delete operation. If you purge the original file, you will lose all historical information in it, but you can then continue with the current delete operation. If you want to keep the history of the old file, you can click No and then rename the new file before deleting it.