I have a different problem. We are also using Kiln to manage version control with Mercurial. I am creating a configuration, attaching a VCS to it, testing the connection and then I click Run. Let's say my module's name is XYZ and I check out everything under a root folder named ROOT. Here is my configuration. In Version Control Setings, in VCS root configuration, I specify that the module should be cloned to C:\ROOT\XYZ. Also, my checkout directory is C:\ROOT\XYZ. What happens when I say Run is that, the module gets checked out but without a .hg folder and because of that, the project cannot be compiled. I realized that, first the version info gets checked out and then it is wiped out when the module itself is cloned. So, I applied a different configuration.
Clone repository to directory in VCS root configuration: C:\ROOT.
Checkout directory in Version Control Settings: C:\ROOT\XYZ\XYZ.
This works fine, but still the .hg folder gets created under C:\ROOT\XYZ and the module is checked out under C:\ROOT\XYZ\XYZ.
If I clone a repository under C:\ROOT\XYZ, using a client program, everything is checked out under C:\ROOT\XYZ and also the .hg folder is created at the same place. I want TeamCity to do the same.
By the way, we are using TeamCity 5.1.4.
Any help is appreciated. Thanks.