Since Unity 4.3 you also have to enable External option from preferences, so full setup process looks like:
- Enable
External option in Unity → Preferences → Packages → Repository
- Switch to
Hidden Meta Files in Editor → Project Settings → Editor → Version Control Mode
- Switch to
Force Text in Editor → Project Settings → Editor → Asset Serialization Mode
- Save scene and project from
File menu
Note that the only folders you need to keep under source control are Assets and ProjectSettigns.
More information about keeping Unity Project under source control you can find in this post.