Thanks to these fabulous sourcesafe installation instructions I was able to get source control working for a class library project.  You *have* install VSS 2005 on your client machine though; don't just assume that VS 2005 is going to be all set up even though you may see padlocks and have source control working for your web applications.  Apparently a class library project is a little different.  So now, after following the instructions to get the plug-in to appear, I was able to add my library to source control on the remote dev server.   So great, now I have a centralized repository with check-in/check-out, and I can do backups off that centralized repository.

What I still don't understand is this:  if developer A opens the project and checks files out, and makes changes and then builds, developer A is making a dll on his local machine.  He can then add reference in a web application to that DLL.  When developer  B opens that web application, if he has his DLL's output to the same path, he might have an older version being referenced.  So I guess the solution is to copy local, so when developer B opens that web application, the bin folder is going to contain the latest DLL.