Solution

Performance Monitor Security settings

The test controller account must be in the Performance Monitor Users group of all machines performance data will be read from. User who is trying to access performance data (locally/remotely) should be part of  ”Performance Monitor Users” and “Performance Log Users”. If there are not much security concerns make the user part of Local “Administrators” group which will ensure full access on the machine.

Load test timeout settings
 
If permission levels are all fine. But still you are still running into the same issue. That means you have to set load test’s performance counter initialization time out settings. But where to do that? as there is no provision to do it though VS IDE. For that you have to do some manual configurations in load test’s hosting process’s configuration file. Now this configuration file is different for VS 2008 and VS 2010. Following are the details on that.
 
For Visual Studio 2008, open the file VSTestHost.exe.config in the folder C:\Program Files\Microsoft Visual Studio 9.0\Common7\IDE
OR
For Visual Studio 2010, open the file Devenv.exe.config in the folder C:\Program Files\Microsoft Visual Studio 9.0\Common7\IDE
AND then add following entries to it. That will solve the timout issue.
 
<appSettings>
      <add key=”LoadTestCounterCategoryReadTimeout” value=”60000″/>
      <add key=”LoadTestCounterCategoryExistsTimeout” value=”60000″/>
 </appSettings>

Group Name: TeamTestAgentService

This group contains the minimal permissions needed for a test agent to connect to a test controller.Connect to a test controller
Before you configure a test agent, add the user accounts that you will use to run the test agent service. This is the user account that you specify in the Test Agent Configuration Tool when you install a test agent.

Group Name: TeamTestControllerUsers

Includes permissions from the TeamTestAgentService group.Start test runs.View test results
Add users that only need to run tests and view test results.

Group Name: TeamTestControllerAdmins

Includes permissions from the TeamTestControllerUsers and TeamTestAgentService groups.Delete, pause, or postpone any test run.Add, remove, and change the status of test agents.Create lab environments.
Before you configure a test agent, add the user accounts that you will use to run the test agent service. This is the user account that you specify in the Test Agent Configuration Tool when you install a test agent.