There is an excellent PDC talk available here from Vishal Joshi which describes the new MSDEPLOY features in Visual Studio 2010 - as well as how to deploy an application wit
For me the problem was that Web Deployment Agent Service was not started.
A simple net start msdepsvc fixed it. You could also set startup mode to Automatic on this service.
The arguments I'm using are:
/p:DeployOnBuild=True
/p:DeployTarget=MsDeployPublish
/p:MSDeployPublishMethod=RemoteAgent
/p:MSDeployServiceUrl=stagingserver
/p:DeployIisAppPath=test.local
/p:UserName=
You only need to specify the server name, and not the full path (no http needed).
Note that UserName is left empty to work around a bug with NTLM authentication (this way it uses the credentials of the TFS build agent for the deployment). see the accepted answer here