If you have disabled service “Terminal Services”, you will get the error as title when you try to start debug in Visual Studio 2005.
Just enable “Terminal Services”, don’t worry, it won’t be a security hole. You can uncheck “enable remote desktop” in “My computer” property window.
or you can try the way below:

b.hesse@MSDN forum
I had the same problem, solved it by disabling the "Visual Studio hosting process"
("Project" -> "[ProjectName] Properties..". -> "Debug" -> Disable "Enable the Visual Studio hosting process")

Whats the purpose of this "Visual Studio hosting process" ?

Anyway, this is not recommended.

The reason why VS2005 need the “Terminal Services” to debug can be found at the greggm’s msdn blog.
For a short description, the debug function relys on an API call: WTSEnumerateProcess in Wtsapi32.dll which relies on “Terminal Services” as you can guess, to do process listing job.
More eg., if you disabled the service, you can’t see process owner in Task Manager. And this is sth more described in the blog entry by microsoft guy: “The Terminal Services service is enabled by default because in addition to the Remote Desktop functionality, it also provides for Remote Assistance, Fast User Switching, process listing, DCOM support, and probably lots of other stuff that I don’t know about because I don’t work on the TS team.”

So just enable and start the service “Terminal Services” and get out of the strange error. Start your dummy debugging happily!