This error message appears while trying to build a team build on TFS.
In order to perform Code Analysis on managed binaries, MSBuild needs to launch FxCop. MSBuild is unable to locate the FxCop binaries. Make sure Visual Studio Team Edition for Software Developers or Visual Studio Team Suite is installed and run MSBuild from within the "Visual Studio Command Prompt" or specify the path to FxCop by setting the FXCOPDIR environment variable.

This means you have to install some version of VSTS on the Build Server. Licensing of Team Test, Team Dev, Team Architect and Team Suite are per-user, not per machine. You are free to install another copy on the build machine as long as everyone who uses it is licensed to use the tools.