Count not load assembly / impersonation in call to lists web service.

I'm trying to run a simple list item add operation and a call to UpdateListItems is returning the following error:

System.ServiceModel.FaultException was unhandled
Message="Server was unable to process request. ---> The type initializer for 'Microsoft.SharePoint.SoapServer.SoapServerException' threw an exception. ---> Could not load file or assembly 'System.Web.Services, Version=2.0.0.0, Culture=neutral, PublicKeyToken=b03f5f7f11d50a3a' or one of its dependencies. Either a required impersonation level was not provided, or the provided impersonation level is invalid. (Exception from HRESULT: 0x80070542) ---> Could not load file or assembly 'System.Web.Services, Version=2.0.0.0, Culture=neutral, PublicKeyToken=b03f5f7f11d50a3a' or one of its dependencies. Either a required impersonation level was not provided, or the provided impersonation level is invalid. (Exception from HRESULT: 0x80070542) ---> Either a required impersonation level was not provided, or the provided impersonation level is invalid. (Exception from HRESULT: 0x80070542)"
Source="mscorlib"
StackTrace:
Server stack trace:
at System.ServiceModel.Channels.ServiceChannel.HandleReply(ProxyOperationRuntime operation, ProxyRpc& rpc)
at System.ServiceModel.Channels.ServiceChannel.Call(String action, Boolean oneway, ProxyOperationRuntime operation, Object[] ins, Object[] outs, TimeSpan timeout)
at System.ServiceModel.Channels.ServiceChannel.Call(String action, Boolean oneway, ProxyOperationRuntime operation, Object[] ins, Object[] outs)
at System.ServiceModel.Channels.ServiceChannelProxy.InvokeService(IMethodCallMessage methodCall, ProxyOperationRuntime operation)
at System.ServiceModel.Channels.ServiceChannelProxy.Invoke(IMessage message)
Exception rethrown at [0]:
at System.Runtime.Remoting.Proxies.RealProxy.HandleReturnMessage(IMessage reqMsg, IMessage retMsg)
at System.Runtime.Remoting.Proxies.RealProxy.PrivateInvoke(MessageData& msgData, Int32 type)
at RockstarGuys.TargetProcess.Extensions.SharePoint.ListsSoap.UpdateListItems(UpdateListItemsRequest request)
at RockstarGuys.TargetProcess.Extensions.SharePoint.ListsSoapClient.RockstarGuys.TargetProcess.Extensions.SharePoint.ListsSoap.UpdateListItems(UpdateListItemsRequest request) in C:\Projects\TargetProcess.Extensions\PublishEvents\Service References\SharePoint.cs:line 2684
at RockstarGuys.TargetProcess.Extensions.SharePoint.ListsSoapClient.UpdateListItems(String listName, XmlElement updates) in C:\Projects\TargetProcess.Extensions\PublishEvents\Service References\SharePoint.cs:line 2693
at RockstarGuys.TargetProcess.Extensions.Program.Main(String[] args) in C:\Projects\TargetProcess.Extensions\PublishEvents\Program.cs:line 124
at System.AppDomain.nExecuteAssembly(Assembly assembly, String[] args)
at System.AppDomain.ExecuteAssembly(String assemblyFile, Evidence assemblySecurity, String[] args)
at Microsoft.VisualStudio.HostingProcess.HostProc.RunUsersAssembly()
at System.Threading.ThreadHelper.ThreadStart_Context(Object state)
at System.Threading.ExecutionContext.Run(ExecutionContext executionContext, ContextCallback callback, Object state)
at System.Threading.ThreadHelper.ThreadStart()


I think it's a bit of a red herring in that I have full control on the site and I don't see the error in the ASP.NET logs on the server. In addition the assembly is installed on the server (.NET Framework 1.0, 1.1, 2.0 and 3.0 are all installed). Has anyone seen this type of error before