In Visual Studio 2008, I can see all my project files in my Solution Explorer, and these files exist in an actual diectory.
However, if I add a file to that directory
On the solution, click the right mouse button and select 'Add existing item' and pick the file from the solution root directory. The Solution will now get a 'Solution Items' directory which contains your file. This directory is virtual, so it does not exist on disk.
However there is no feature like 'Show All Files' for a solution, this only works on projects.