Over time I've worked with several different companies performing customizations to their TFS Process Templates. One topic would come up fairly regularly: "How Do I see Bugs on my Backlog?". Companies would want to use one of the Agile-based templates, but wanted to have bugs appear on the backlog. After some discussions on handling bugs, often we would settle on adding bugs to the backlog.
Now, Microsoft must've heard a lot about this as well, and they set out to make things better. As of TFS 2013 Update 4, each team can choose to set to have bugs display on the backlog! There is a nice little setting in the admin section to do just that!! Wonderful! No more manipulation of Process Templates to make this little feature work! Or is there?
You see, I recently worked to upgrade a company from TFS 2010 to TFS 2013.4, and you guessed it, they had ALREADY had bugs on their Agile backlogs through a Process Template customization. Now when it came time to upgrade their template, I "fixed" the template so that it would work with the new Bugs on the Backlog setting (had to take the Bug work item out of the Requirements Category). This seemed to work out great! Each team within a Team Project could now even choose to display bugs how they wanted! All was happy... for a few minutes...
Two things made them want to change back to include Bugs as a requirement category item, and thus break the setting in the Admin section (with the nasty little note: TF400917: the current configuration is not valid for this feature).
First was a minor little nag, the company wanted to utilize Tiago Pascoal's nifty Task Board Enhancer. One piece of that enhancer color-codes the cards on the task boards to match the Red/Blue coloring for Bugs and User Stories... BUT, that only works when there are more than one work item type in the Requirements Category. Without setting this, there was no color-coding on the Task Board.. not a HUGE deal, but it was one of the things that a lot of people really liked about the Task Board enhancer...
The Second thing was a little bit more trouble. The QA team started coming to me complaining that they could no longer add "Bugs" to their suites when adding Requirements to the Suite. They would get a message stating that their query needed to return User Stories. This was causing them trouble, because over time they had become very accustomed to putting Bugs in to their requirements-based suites. Adding the Bug back as a requirement category item returned that functionality to them.
Those two things were more than enough for the company to be fine with the nagging TF400917 error on the Settings for their Team. They could no longer choose to turn things on/off through a setting, but their intention was to always have it on anyway.