To set up a project, you can use several methods. There are several popular Subversion clients, including Eclipse (with Subclipse), Tortoise SVN, Rapid SVN, and the good ol' command line.

Change to the directory you want to work on your Vufind instance and then run this command

svn co https://vufind.svn.sourceforge.net/svnroot/vufind/trunk vufind

This will check out the Vufind source into a folder named vufind.

As a side note, don't forget to export the code if you are planning a deployment:
svn ex https://vufind.svn.sourceforge.net/svnroot/vufind/trunk vufind
This removes the .svn files and will greatly reduce the file size of the package

Vendor branching is a useful strategy for merging changes to an external project (i.e. VuFind) with changes to a local project (i.e. your own VuFind-based catalog). To take advantage of this, you need your own Subversion server. The general idea is that when you set up your project, you should first create a “vendor” directory and populate it with the third party code. The “trunk” directory that you do your development in should be established as a copy of the “vendor” directory. Whenever the vendor code changes, you load the latest third-party code into the “vendor” directory and then combine those changes with your customized “trunk” by using Subversion's powerful merging capabilities.

It sounds complicated at first, but it makes more sense when you understand version control in general. This is highly recommended if you plan on maintaining a complex VuFind installation over the long term! For more details, see the vendor branching chapter of the very helpful Version Control with Subversion book.