This warning has the following cause and solutions:
Click Yes to check out the file anyway. (Yes All checks out all selected files even if they are already checked out by another user.) If you click Yes, there may be conflicts between your changes and those of another user, which will have to be resolved and merged later.
Click No to cancel the Check Out command. (No All cancels the command for all selected files.)
If you want to work on a checked-out file, it's best to check the User column of VSS Explorer for the name of the user who has it checked out and ask that user to check it in as soon as possible. If the user is unavailable, the VSS Administrator can undo the check out for you.