One thing I allways run across when installing a new server is that it won't allow connections over the loopback interface when using integrated security. I usually test the applications from the server console and everytime they give errors; 401.1 for most applications but the Microsoft Virtual server administration console for instance returns status 500 with a message parameter incorrect.

The Crm 3.0 webservice is a great improvement on the 1.2 version but still due to the nature of webservices working with it can require some quite elaborate code. You need to instantiate the class, configure security, create a ColumnSet, add columns to the column set and finally execute the Retrieve method and cast its result. This results in about 10 lines of code for such a simple action. Using partial classes introduced in the .Net 2.0 framework you can extend the Webservice without lossing the easy of recreating the webproxy when you change or and a type. Using generics you can even enforce type safety at compiletime.