I happened to get this error because the file "ProjectName.vbproj.webinfo" file was missing in my project folder.
I have my project under source control . The source control does not have the webinfo file for you to get into your project. This is because this file keeps track of a project's virtual root location and it can be different for different people working on the same project. So when you have this file in your project folder you don't need to add the project to your solution by using “Add Existing Project From Web”, you can use “Add Existing Project” with Visual Studio.
Here is the content of the file:
<VisualStudioUNCWeb>
<Web URLPath = "http://localhost/TubaWebServices/TubaWebServices.vbproj" />
</VisualStudioUNCWeb>