In a project that I am working now, a new WIX setup project was added by a developer. When I'm trying to get the latest from the TFS that we are using for the code base, the newly added project is shown as incompatible and while building the solution following error is thrown: 
Has anyone experienced this before?
In a typical team build, the TfGetSources activity will do a Get to retrieve the source files from TFS source code control. However the Get will set the Read Only attribute on all files retrieved, and any attempt to over-write any source code controlled file, during the build, will result in an Access Denied error.
Your new project is using the WIX toolset Heat.exe utility to generate the file C:\70_Suite\Accounting\IBS.Accounting.Setup\App.wxs. This file is under source code control which means it will be read only. The Heat.exe utility is throwing the Access Denied error because it can't over-write this file.
One solution is to remove C:\70_Suite\Accounting\IBS.Accounting.Setup\App.wxs from team foundation source code control. It is generated by heat.exe anyway, so doesn't need to be fetched by the TfGetSources activity.
If you need to keep C:\70_Suite\Accounting\IBS.Accounting.Setup\App.wxs under source code control, then a work-around would be to remove the read-only attribute from this file. This could be done in the Pre-Build Event Command Line in the new WIX project.
C:\70_Suite\Accounting\IBS.Accounting.Setup\App.wxsunder source code control in TFS?