I added an AjaxToolkit:AutoCompleteExtender to my ASP.Net 3.5 application. The web service lives in the same web application. Now I am getting this error when I hit F5/Debug
So I think that this is a non-issue. The exception probably gets thrown all the time, but I had turned on "Break when an Exception is thrown" in Debug/Exceptions for all types there, to diagnose an unrelated problem. Since I unchecked the check boxes to their default state, I no longer see the binding problem.