TF402484: The "PROJECTXYZ" team project has been deleted. Undo any pending changes to that project or branches from that project in your local workspace. Then retry the operation.
In Team Explorer, click to Pending Changes. you will see there are four section in it which is Comment, Related Work Items, Included Changes and Excluded Changes. Look at Excluded Changes section if there are any files which belong to deleted folder. If yes, right click at the file name and choose Undo.