Yesterday, we so this error message and found the solution here which says that the reason for this kind of error message may be because one of the following occurs:
- The application pool is not running.
- The application pool account uses an incorrect password.
- The application pool account is not a member of both the IIS_WPG group and the STS_WPG group on the server.
In our case it was the third one, after adding the application pool user to the IIS_WPG group the WebService run like a magic.....