@Doctor Who: The Team Foundation Service (TFS in the Cloud) is 100% private, no matter if you choose to use the TFVC (the old/traditional) version control system, or GIT. Both are first class citizens and both are only exposed to the people you save they are. It's a real TFS, just running on MS's hardware. There's a few things you can't do with it, like builds with custom components, but all in all, it's very complete and kept even more up to date than the one you install in your data center.

It's free for 5 users, so there's no harm checking it out, to at least get yourself familiar with TFS.

Yes, TFS Express gets you version control and work item management (i.e. user stories, bug tracking, etc). It's about 100% more powerful than VSS, but the full version is 1000%...

I've not actually installed it, so I can't say how it handles already installed databases. I do know they've put in a great deal of effort to try to make it click-click-click easy to install, so...

BTW, not to toot my own horn, but there's this great TFS podcast... RadioTFS (where I just happen to be a co-host Smiley and all we talk is TFS stuff. Worse case, the show notes are a great resource for TFS. http://www.radiotfs.com/