VSS was picked up via the acquisition of One Tree Software in Raleigh. Their product was SourceSafe, and the "Visual" part was added when it was bundled with their other developer tools (Visual C, Visual Basic, etc). Prior to that Microsoft sold a version control product called "Microsoft Delta" which was expensive and awful and wasn't supported on NT.
One of the people who joined Microsoft via the acquisition was Brian Harry, who led the development of Team Foundation Version Control (part of Team Foundation Server - TFS) which used SQL Server for its storage. A huge improvement in manageability and reliability over VSS. I think Brian is retired now - his blog at Microsoft is no longer being updated.
From my time using VSS, I seem to recall a big source of corruption was it's use of network file locking over SMB. If there were a network glitch (common in the day) you'd have to repair your repository. We set up an overnight batch job to run the repair so we could be productive in the mornings.