Integrated Windows Security when calling an ASMX service - web-services

Question

I have some issues with an ASMX web service running on Win XP with IIS 5.1. The IIS is set up with Integrated Windows Authentication and with anonymous access disabled. (When I have anonymous access enabled, everything works as a charm.)
However, when I turn of anonymous access and run with only Integrated Windows Authentication on my IIS, I get the following exception:
The HTTP request is unauthorized with client authentication scheme 'Negotiate'. The authentication header received from the server was 'Negotiate,NTLM'.
This exception is generated from my really simple console application that I'm using just to test the concept:
BasicHttpBinding binding = new BasicHttpBinding();
binding.Security.Mode = BasicHttpSecurityMode.TransportCredentialOnly;
binding.Security.Transport.ClientCredentialType = HttpClientCredentialType.Windows; // .None;
binding.UseDefaultWebProxy = false;
EndpointIdentity spn = EndpointIdentity.CreateSpnIdentity("WORKGROUP/VirtualXP-91051");
Uri uri = new Uri("http://169.254.91.91/MyWebSite/MyService.asmx");
EndpointAddress address = new EndpointAddress(uri, spn);
MyServiceSoapClient client = new MyServiceSoapClient(binding, address);
client.ClientCredentials.Windows.ClientCredential = CredentialCache.DefaultNetworkCredentials;
String req = "( the request string is blanked out.. ;) )";
string resp = client.ReqAddressData(req);
Console.WriteLine(resp);
Console.ReadLine();
The interesting part of App.config:
<security mode="TransportCredentialOnly">
<transport clientCredentialType="Windows" proxyCredentialType="None"
realm="" />
<message clientCredentialType="UserName" algorithmSuite="Default" />
</security>
This isn't rocket science, so I must be missing something obvious. I've done some searching here on SO, and eve though I can find many similar questions I've found nothing that solved my problem.