If you try to add service reference in your Silverlight application and you simply cannot discover any services in the solution using the Add Service Reference tool here is the way how to solve it. Note that the issue occurs both in Silverlight 2 and Silverlight 3 Beta.
1. Uninstall your Silverlight tools for Visual Studio
2. Go to C:\Program Files\Microsoft Visual Studio 9.0\Common7\IDE or the place you have installed your Visual Studio environment.
3. Delete the file Microsoft.VisualStudio.ServicesProxy.dll
4. Install again Silverlight tools for Visual Studio and note that your file will be created again.
There seems to be something wrong with the installer of Silverlight tools, which...