I didn't wreck my computer and I'm glad I didn't. I managed to create a working web service and host it on my own computer on IIS (running windows XP Professional). However, there are some complications when transfering my service to the TFS VPC (I'm developing on my own computer, usin Visual Studio 2008).

The problems encountered has to do with the configuration of IIS, and how they differ from XP <--> Windows Server 2003. First of all, it took some time before I even managed to create a (correct) virtual directory to store my web service in. Although managed (by editing the client .config-file and deleting the subfolder entry to make it point directly at http://localhost:38970/Service.svc, even though I've created a virtual subdirectory for my webservice), I still have som problems regarding authorization. Because the credentials differ from my XP installation and the TFS VPC, I'll have to go around that somehow. When I try to call the webservice it just shouts back at me:

System.ServiceModel.Security.MessageSecurityException: The HTTP request is unauthorized with client authentication scheme 'Anonymous'. The authentication header received from the server was 'Negotiate,NTLM'. ---> System.Net.WebException: The remote server returned an error: (401) Unauthorized.
at System.Net.HttpWebRequest.GetResponse()
at System.ServiceModel.Channels.HttpChannelFactory.HttpRequestChannel.HttpChannelRequest.WaitForReply(TimeSpan timeout)
--- End of inner exception stack trace ---

I really don't know how to work around this part as of now. Suggestions would be greatly appreciated. (It works extremely well on my own XP computer! I just can't get it to work on the TFS VPC...).