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I have resolved this issue. It was not a direct problem with the web service or the .Net Framework, but an odd combination of VPN and IIS. For whatever reason, when I select both Windows Integrated and Anonymous, the web service works from an external resource (via vpn). However, when only Anonymous is checked, the web service would fail. This only related to external requests through the vpn. From internal request, the web service worked the same regardless of the Windows Integrated option.