Webservice- Posting Sales Order

i've had to overcome this issue a while back.

both problems may not be the same but here are some things to check.
eventually you will narrow it down.

nothing in try catch. i hate it when that happens.
double check your initialization settings on your services code
double check your credentials code (especially the DOMAIN pointer). there's more than one way to specify a domain. if the name doesn't work try the ip addy.
double check the url services pointers in web.config
double check the settings in the config file in the dynamics folder on the app server (i can't recall the name of the file right now)
make sure your ports are all opened properly 7047, 7049, etc.
make sure your webserver and the app server can talk.
--if they are on the same network then it won't be much of a problem
--if its on another network, you may have to create a trust relationship between the two networks so the credentials passed are accepted.
check the error log on the app server for failed login attempts or other errors which might point you in the right direction.
make sure your proxy credentials in sql server work outside of your project. use sql manager from your localhost to validate your credentials.
worse case scenario, download wireshark and get to sniffin some packets!