are there any free Team Foundation Server sites we can use for our private development? Please don't say CodePlex (which I love) because that means the code is all opensource.
Lastly, I also understand that some people might raise the issue of having their private code hosted somewhere by people they do not know, etc.. so please don't raise any security concerns.
I'm guessing there are no free services because of licensing reasons?
No free providers for private TFS hosting. It's not just licensing restrictions that would stop them, seems like it would be a hard job to make money while providing servers and the bandwidth for people to host private projects.
If you are a small start-up and wanted to use TFS, then take a look at the new BizSpark program from Microsoft. This provides basically everything you need to start up a Microsoft technology based company for free (apart from the hardware) - including TFS and Visual Studio Team Suite.
There are a growing number of commercial TFS hosting companies available should you want the benefits of TFS without the fun of hosting it yourself. One of these is currently offering a 30-day free trial of TFS hosting, for more information see http://www.teamdevcentral.com/trial.html
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