I am using EF4 Self Tracking Entities (VS2010 Beta 2 CTP 2 plus new T4 generator). But when I try to update entity information it does not update to database as expected.
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You have to share assembly with STEs between client and service - that is the main point. Then when adding service reference make sure that "Reuse types in referenced assemblies" is checked.
The reason for this is that STEs contain logic which cannot be transfered by "Add service reference", so you have to share these types to have tracing logic on client as well.