Error : ASP.NET Webservices: "The request failed with HTTP status 401: Access Denied." Error

We can resolve this issue by either of the following ways:
1. Enabling Anonymous Access in the IIS Directory Security
To do this, the following steps will help you.
1. Click "Start" - "Run" - Type "inetmgr" and press "Ok" or "Enter" Key
2. IIS Control panel opens.
3. Expand the appropriate nodes and navigate to the virtual directory of your Web Service Application.
4. Select the Virtual directory, Right Click and select "Properties"
5. Switch to the "Directory Security" Tab and then Click "Edit".
6. Check the "Anonymous Access" CheckBox.
7. Click "Ok" twice to exit.

This should solve the issue