Special thanks to Kyle (the new master of AJAX) for pointing this one out to me. After upgrading from Atlas CTP to ASP.NET AJAX, I found that my AutoCompleteExtenders were not working. This is due to the fact that a new attribute is required on the class definition for your web service. Be sure and add the following to anything you are calling through AJAX whether it is an extender or custom script code.
[ScriptMethod]
The attribute is part of the Microsoft.Web.Script.Services namespace.
Read the complete post at http://www.dotnettipoftheday.com/blog.aspx?id=326