Each item in a VSS project must have a unique name. This error has the following cause and solution:
To resolve this error, give the new item a different, unique file name. Or, you can delete or rename the existing item.
Note File and project names in VSS are not case-sensitive. For example, if you have a file named Test.C, you cannot create a subproject or file named "Test.c" or "test.c" in the same project.