In Misrosoft.WebDeployments.targets file (which web deployment project file imports) there's a _CopyBeforeBuild target which copies all the source files when ExcludeFromBuild property isn't empty or EnableCopyBeforeBuild is specified:
...
<CopyBeforeBuildTargetPath>$(MSBuildProjectDirectory)\Source</CopyBeforeBuildTargetPath>
...
<Target Name="_CopyBeforeBuild" Condition=" '$(EnableCopyBeforeBuild)' == 'true' or '@(ExcludeFromBuild)' != '' ">
...
<RemoveDir Directories="$(CopyBeforeBuildTargetPath)"/>
<MakeDir Directories="$(CopyBeforeBuildTargetPath)"/>
<Copy SourceFiles="@(_WebFiles)" DestinationFolder="$(CopyBeforeBuildTargetPath)\%(_WebFiles.SubFolder)%(_WebFiles.RecursiveDir)" />
...
</Target>
So the script creates the source directory and doesn't remove it. That directory annoys me too so I add next lines to web deployment project file:
<Target Name="AfterBuild">
<RemoveDir Directories="$(CopyBeforeBuildTargetPath)" />
</Target>