VSS Insights and Branching and Merging?

Hello --

Some question about some best practices, guidance, and experiences on
how you folks deal with VSS from you about how to handle Branching and
Merging. And BTW ... if it means that Source Safe is NOT the correct
product ... so be it ... because God knows i've my fair share of
source code scares with Source Safe. The environment that I am talking
about here is a typical .Net 2.0 dev environment running IIS v5.0 and
IIS v6.0 and Visual Source Safe 2005.

Here is some of our best practices/problems that I have encountered
with Source Safe ...
1. We currently have a best practice of matching the root of Source
Safe ($) to our (C:) drive (making C: our working directory to $). So
our VSS repository "shape" is an exact match of what is on our local
filesystems. The main impetus for this is ... Once upon a time we had
some situations where some developers had the source code mapped to
wierd places on their local filesystems and it caused some major
problems.
2. If you have a Web Site/Web Project in your solution with Library
Projects. This can become very problematic with IIS and the Virtual
Directory issue, especially if one dev has issues ... checks out the
solution to "re-add" the Web Project and then checks in ... all the
other devs all of a sudden have problems. Does anybody have any
insights on this?

Now on to Branching and Merging:
1. Right now we currently run 2 seperate VSS Repositories; one with
our production code and one with our dev code. I know that this is
less than ideal. I really want to move to a single repository.
2. Any suggestions, esp. with maintaining a Web Site/Web Project in
our current solutions?

Thanks in advance,
--Rich