Заработало..я поменял код создания сервиса
Код:
CrmAuthenticationToken token = new CrmAuthenticationToken();
token.OrganizationName = sOrgname;
token.AuthenticationType = 0;
//Create the Service
CrmService crmService = new CrmService();
//crmService.Credentials = System.Net.CredentialCache.DefaultCredentials;
crmService.Credentials = new System.Net.NetworkCredential("administrator", "pass@word1");
crmService.PreAuthenticate = false;
crmService.CrmAuthenticationTokenValue = token;
string crmurl = (string)(Registry.LocalMachine.OpenSubKey("Software\\Microsoft\\MSCRM").GetValue("ServerUrl")) + "/2007/crmservice.asmx";
crmService.Url = crmurl;