A snippet from an extended DefaultTemplate.xaml TFS 2010 Build Process Template for failing the build when the number of compile warnings increases.

FailOnMoreWarnings.xaml

<!-- Insert this Sequence as one of the last children of the Sequence with DisplayName="Compile and Test" -->
<Sequence>
  <Sequence.Variables>
    <Variable x:TypeArguments="mtbc:IBuildDetail" Name="LastBuildDetail" />
    <Variable x:TypeArguments="x:Int32" Name="LastWarningCount" />
    <Variable x:TypeArguments="x:Int32" Name="WarningCount" />
  </Sequence.Variables>
  <Assign x:TypeArguments="mtbc:IBuildDetail" To="[LastBuildDetail]" Value="[BuildDetail.BuildServer.GetBuild(BuildDetail.BuildDefinition.LastBuildUri)]"  />
  <Assign x:TypeArguments="x:Int32" To="[LastWarningCount]" Value="[Microsoft.TeamFoundation.Build.Client.InformationNodeConverters.GetBuildWarnings(LastBuildDetail).Count]"  />
  <Assign x:TypeArguments="x:Int32" To="[WarningCount]" Value="[Microsoft.TeamFoundation.Build.Client.InformationNodeConverters.GetBuildWarnings(BuildDetail).Count]"  />
  <If Condition="[WarningCount &gt; LastWarningCount]">
    <If.Then>
      <Sequence>
        <mtbwa:WriteBuildError Message="This build has more warnings than the last build. Focus on fixing more build warnings than are introduced." />
        <!-- The follow SetBuildProperties line will mark the build as Failed instead of just Partially Successful if the warning count has increased. -->
        <mtbwa:SetBuildProperties PropertiesToSet="Status" Status="Failed" />
      </Sequence>
    </If.Then>
  </If>
</Sequence>

There are a few things that need to be changed for this to work as expected.

First, this doesn't account for any warnings that appear in the "Other Warnings & Errors" section in the build summary. The "LastWarningCount" is the total number of warnings, and the "WarningCount" is only the number of warnings generated from MSBuild.

Second, since a "good build" is one where both "CompilationStatus" and "TestStatus" are "Succeeded", then one of these values needs to be set to "Failed". Otherwise, the next time you queue a build, it will continue to falsely recognize builds that failed due to warnings as the "LastGoodBuild".

So, I would add the following in addition to using "LastGoodBuild":

<mtbwa:SetBuildProperties PropertiesToSet="CompilationStatus" Status="Failed" />