I\'ve built my packages and read through this docs @ http://www.asp.net/web-forms/overview/deployment/web-deployment-in-the-enterprise/deploying-web-packages
And it
Apprently undocumented anyway ... the answer is ...
You can't run MS deploy commands that talk to the MSDeploy service on the same machine.
No idea why, this makes no sense, but taking the same command and executing it on another box seems to work fine even when deploying to the same box I had the issue on.
Well done Microsoft ... way to make a Team Services Admins life a dream!
If you want to use a domain account you should set the authType to "NTLM".