Seems we have found the problem, it seemed to have been due to a duplication of a projects tree and it mangled up source control, and somehow as a repercussion the service referencing broke.
Goes like this:
1) I had a projects folder of which I made a copy. (All the projects in it were under source control).
2) I left the original (A) untouched while a colleague worked on a certain project of mine via source control.
In the meantime I worked on the same project using the copy folder (B).
The idea was that the colleague works on the project in folder (A) by checking out the source on his computer.
I would then work on the same project in folder (B) with the idea of NOT touching source control (commit nor checkout).
3) When we would both be done, my colleague would commit his changes, I would check them out in folder (A)
4) I would then incorporate my changes from folder (B) manually into folder (A) to produce a merged project.
This may seem like we are defeating the purpose of collaborative development and how source control should be used, but I decided on it to prevent conflicts as I have had prior nightmares with source control. Turned out it was the wrong way after all and caused more problems than merging with source control would have been.
The service reference issue was resolved by deleting the copied folder (B) as well as the original folder (A) and doing a fresh checkout in a new location after my colleague finished his part today and committed his changes.
What Exactly happened is still beyond me, but since I made that copy of the projects folder I ran into problems and I'm pretty sure it is related to source control.
Thanks to all who provided input.
