Visual Studio 2012/Team Foundation Server 2010 Error: "Logon failure: unknown user name or bad password"

Clicking any of the following settings from Team Explorer in Visual Studio 2012 produces the "Logon failure: unknown user name or bad password" error:

• Team Project Collection > Security
• Team Project Collection > Group Membership
• Team Project > Security
• Team Project > Group Membership
• Team Project > Work Item Areas
• Team Project > Work Item Iterations
• Team Project > Project Alerts

The problem occurs because Team Foundation Server 2012 uses a new authentication scheme. Instead of using the credentials that were supplied to authenticate and connect to a TFS server in a single server configuration, the credentials of the local Windows user is issued when a new instance of Internet Explorer is launched.

The workaround is to use the Team Web Access interface to administer changes. The Team Web Access URL for your account can be found on the Account Information page.