For adding Solution level "packages" folder with repositories.config to VS Solution Explorer, I created a Solution folder and added repositories.config.
That created packages folder in the SourceSafe when I checked-in the solution.
I also found someone pointing the same thing here.
Update: I think the newer nuget is restoring the packages. But one other trick for nuget to add the dll to the bin folder it to check-in the .refresh files for AjaxControlToolkit and its dependent packages.