These errors both occured in my new project that uses enterprise library logging.
First of all thanks to:http://community.codesmithtools.com/forums/t/2126.aspx
PROBLEM Windows XP: "System.Security.SecurityException: The source was not found, but some or all event logs could not be searched. Inaccessible logs: Security."
SOLUTION: Add the .NET user, "ASPNET", to the "ADMINISTRATORS" group.
My second thanks goes to: http://blogs.microsoft.co.il/blogs/bursteg/archive/2007/07/27/WCF-Test-Client-svcutil.aspx
Disable strong name signing for svcutil.exe by opening a Visual Studio Command Prompt. At the command prompt run: sn -Vr "<program files>\Microsoft SDKs\Windows\v6.0A\Bin\SvcUtil.exe" (replace <program files> with your program files path - ex: c:\Program Files)
God knows, we would have to be better developers if google was not invented :P