I changed my account on Team Foundation Server Online and had multiple workspaces bound to my old account, so when trying to create new workspace I could do so as there was already a workspace created for my old account.
You need to use TF command on Visual Studio command prompt to remove the old workspace. Syntax is:
tf workspace /delete "WORKSPACENAME;PREVIOUSUSERACCOUNT”
as this was TFS Online, it was Microsoft Account, so in my case actual command was
tf workspace /delete "MIWORKSPACE;firstname.lastname@example.org"