TF30177: Team Project Creation Failed

I'm having some problems creating a project on the Beta3 version of TFS.

It's a dual server setup, clean w2003std sp1 servers with all security patches installed. As a client I'm using the VS2005 RC with the Beta3 TFClient.
Somewhere halfway during the creation of a new project I get an error: TF30177: Team Project Creation Failed

The user is local admin on the database server, sharepoint server and client. I also added the user manually with tfssecurity to the tfs admin group. I am using sharepoint SP2. There was another post regarding SP2 with NTLM permissions, all the websites have NTLM authentication enabled.

Excerpt from the log:

---begin Exception entry---
Time: 10/18/2005 2:49:56 PM
Module: Engine
Event Description: TF30162: Task "SharePointPortal" from Group "Portal" failed
Exception Type: Microsoft.TeamFoundation.Client.PcwException
Exception Message: Insufficient permissions on the Windows SharePoint Services at SPSVS2005 to create a new site.
Exception Details: The permissions granted your user name and ID on the Windows SharePoint Services at SPSVS2005
do not allow you create a new portal site. You must be granted specific root
permission by the server administrator.
Stack Trace:
   at Microsoft.VisualStudio.TeamFoundation.WssSiteCreator.Execute(ProjectCreationContext context, XmlNode taskXml)
   at Microsoft.VisualStudio.TeamFoundation.ProjectCreationEngine.TaskExecutor.PerformTask(IProjectComponentCreator componentCreator, ProjectCreationContext context, XmlNode taskXml)
   at Microsoft.VisualStudio.TeamFoundation.ProjectCreationEngine.RunTask(Object taskObj)
 --   Inner Exception   --
Exception Type: Microsoft.TeamFoundation.Client.PcwException
Exception Message: Insufficient permissions on the Windows SharePoint Services at SPSVS2005 to create a new site.
Exception Details: The permissions granted your user name and ID on the Windows SharePoint Services at SPSVS2005
do not allow you create a new portal site. You must be granted specific root
permission by the server administrator.
Stack Trace:
   at Microsoft.VisualStudio.TeamFoundation.WssSiteCreator.VerifyLcidOnServer(ProjectCreationContext ctxt, Int32 lcid)
   at Microsoft.VisualStudio.TeamFoundation.WssSiteCreator.ValidateSite(ProjectCreationContext context, XmlNode site)
   at Microsoft.VisualStudio.TeamFoundation.WssSiteCreator.Validate(ProjectCreationContext context, XmlNode taskXml)
   at Microsoft.VisualStudio.TeamFoundation.WssSiteCreator.Execute(ProjectCreationContext context, XmlNode taskXml)
 -- end Inner Exception --
 --   Inner Exception   --
Exception Type: Microsoft.TeamFoundation.TeamFoundationServerUnauthorizedException
Exception Message: TF30063: You are not authorized to access SPSVS2005.
Stack Trace:
   at Microsoft.TeamFoundation.Client.TeamFoundationSoapProxy.ThrowIfUnauthorized(HttpWebResponse response)
   at Microsoft.TeamFoundation.Client.TeamFoundationSoapProxy.GetWebResponse(WebRequest request)
   at System.Web.Services.Protocols.SoapHttpClientProtocol.Invoke(String methodName, Object[] parameters)
   at Microsoft.TeamFoundation.Proxy.Portal.Admin.GetLanguages()
   at Microsoft.VisualStudio.TeamFoundation.WssSiteCreator.VerifyLcidOnServer(ProjectCreationContext ctxt, Int32 lcid)
 -- end Inner Exception --
--- end Exception entry ---

10/18/2005 2:49:56 PM | Module: Engine | Thread: 5 | TF30202: Task "" from Group "" will not be run because a prior task failed.
10/18/2005 2:49:56 PM | Module: Engine | Thread: 5 | TF30202: Task "Site" from Group "Reporting" will not be run because a prior task failed.
10/18/2005 2:49:56 PM | Module: Engine | Thread: 5 | TF30202: Task "Populate Reports" from Group "Reporting" will not be run because a prior task failed.
10/18/2005 2:49:56 PM | Module: Engine | Thread: 5 | TF30202: Task "" from Group "" will not be run because a prior task failed.
10/18/2005 2:49:56 PM | Module: Engine | Thread: 6 | Attempting to delete MSF folder "C:\Documents and Settings\USER\Local Settings\Temp\TPW_tmp2D.tmp"
10/18/2005 2:49:56 PM | Module: Engine | Thread: 6 | The temporary folder C:\Documents and Settings\USER\Local Settings\Temp\TPW_tmp2D.tmp used to store the process template was removed.
---begin Exception entry---
Time: 10/18/2005 2:49:56 PM
Module: Wizard
Event Description: TF30002: The New Team Project Wizard encountered an error deleting the project Test-Project
Exception Type: Microsoft.TeamFoundation.TeamFoundationServerUnauthorizedException
Exception Message: TF30063: You are not authorized to access SPSVS2005.
Stack Trace:
   at Microsoft.TeamFoundation.Client.TeamFoundationSoapProxy.ThrowIfUnauthorized(HttpWebResponse response)
   at Microsoft.TeamFoundation.Client.TeamFoundationSoapProxy.GetWebResponse(WebRequest request)
   at System.Web.Services.Protocols.SoapHttpClientProtocol.Invoke(String methodName, Object[] parameters)
   at Microsoft.TeamFoundation.Proxy.Portal.Admin.GetLanguages()
   at Microsoft.TeamFoundation.Client.TeamProjectDeleter.Delete()
   at Microsoft.VisualStudio.TeamFoundation.PortfolioProjectForm.TryDeleteProject()
--- end Exception entry ---

What's going wrong How do I give the user the appropriate permissions and how do I get rid of the projects that were half-created

Thanks in advance for any help,

Regards, Michiel