We\'re getting errors every so often with a WCF service (consumed by Silverlight) that don\'t give us much to go on:
The service \'/ourservice.svc\' c
A similar problem is reported here: Service activation problem that seems to be related to log files.
Looks like a bug in System.Web. Same issue is reported here: http://connect.microsoft.com/VisualStudio/feedback/details/550511/nullreferenceexception-during-service-compilation.
The jury is still out, but I think you have better chances of getting this issue resolved if you post your details on http://connect.microsoft.com.
Is anything in the service modifying the contents of the \bin directory? When hosting under ASP.NET, the ASP.NET runtime will monitor the \bin directory for any changes and, when a change is seen, it will attempt to reinitialize the application so that it picks up whatever changes there might have been.
You should not have anything writing to the \bin directory as part of your service's normal operation. Usually this is a problem with log files being configured to write to the \bin directory rather than a specific directory of their own. If you are unable to write the log files someplace outside the root of your application directory for whatever reason, just write them into a \logs sub-directory and configure ASP.NET to block all access to that directory like so:
<location path="logs">
<system.web>
<authorization>
<deny users="*" />
</authorization>
</system.web>
</location>
We've received the similar error during testing of WCF services, when one of the developers started a deployment of a new version of the service.