Situation
1. Visual studio 2008 SP1
2. IIS 7
3. Hosting WCF within site with a VDir.
This happens typically when you are hosting with hosting provider.
If you create a website in main folder (Which will be by default ) and you host a ASP.NET web site. Doesn't matter if it is AJAX or simple website. With SP1, we have 'ScriptHandlerFactory' with any web application.The site works perfectly.
Now if you are creating a service say a WCF service under a Vdir in this site, you will have a different Web.config for your service. Service will run fine locally. When hosted, The website will inherits the settings form parent level . This should be the reason of this issue. You can check if there is a web.fig file in the parent web content folder and an duplicate collection entry in it.
Typically a duplicate entry from services config needs to be removed.
