Thanks for the sample solution. The message I'm seeing when trying to add a service reference is:
Warning 1 Custom tool warning: Could not load file or assembly 'System.Xml, Version=22.214.171.124, Culture=neutral, PublicKeyToken=7cec85d7bea7798e' or one of its dependencies. The system cannot find the file specified.
I'm not entirely sure what the root cause is but it looks like it has to do with the fact that Enterprise Library is referencing System.Xml Version 126.96.36.199 but the solution is referencing version 188.8.131.52.
The solution is to go to the advanced properties when adding a service reference and un-check the Reuse types in referenced assemblies. In the sample project this does not affect the generated code.
Enterprise Library support engineer