I was trying to regenerate a Silverlight proxy, but I kept getting this error:
Turns out, Win 7 sometimes adds an <extendedProtectionPolicy policyEnforcement="Never" /> element to your Web.config.
Here’s the workaround according to the Silverlight Web Services team:
On Windows 7, when you use the Silverlight-enabled WCF Service item template, an <extendedProtectionPolicy /> element may be generated in Web.config. This element is not supported by Silverlight. Simply remove the element from Web.config and try regenerating the Silverlight proxy.
Here’s the link to the article that talks about this, and other issues in Silverlight 3 Beta.