One of the key differences between the MSF for Agile template and the Visual Studio Scrum template is that Scrum
manages bugs along with product backlog items during sprint planning
http://msdn.microsoft.com/en-us/library/vstudio/ms400752(v=vs.110).aspx
The Scrum approach makes sense to me. Fixing a bug involves planned work and creates some sort of benefit for end users.
Why are bugs not managed as backlog items using the agile template? Is the team expected to just absorb time spend fixing bugs? Is the template assuming another resource will attend to bugs outside of the project scope?
The expected workflow in the Agile template, is that a Bug WI will be created, then a linked User Story to represent the work to fix that bug. The User Story is what goes on the backlog and is prioritized.
If you inspect the Bug WITD XML you will see that in the transition from Active to Resolved one of the Reasons is "Copied To Backlog", this is meant to indicate a related User Story was created.
It's really awkward, but that's how the template was originally designed for whatever reason.