When you use Add Service Reference wizard to add a reference to existing WCF service to your silverlight application, you may run into this warning. The description of the warning has all the details about the issue and also tells you what to do to fix it. Now you are wondering why this happened. When you use Visual Studio to create WCF project, you will notice that it generates a configuration file for your service as well where you can configure endpoint, bindings etc. for your WCF service. If you have not modified your configuration file, you may notice something like below set as endpoint.
<endpoint address="" binding="wsHttpBinding" contract="ByteBlocks.ForExService.ICurrencyService">
Notice that binding is set to wsHttpBinding. This is the binding that provides you connectivity over HTTP/HTTPS with features like reliability, security etc. as specified in WS* protocol. The problem is that Silverlight 2 applications can only connect with ASMX-based web services or services that conform to WS-I Basic Profile 1.1. What that means is that Silverlight applications can only create BasicHttpbinding. So if you modify your service to expose an endpoint that implements basicHttpBinding you are good to go. If your existing WCF service is not tightly coupled with any of WS* features then you can change the existing configuration file as below.
<endpoint address="" binding="basicHttpBinding" contract="ByteBlocks.ForExService.ICurrencyService">
Now if you try Add Service Reference tool to add reference to your WCF service, you will not see such warning and a nice set of proxy classes will be created for you to start communicating with WCF service.