Thank you. Restarting BizTalk Host Instance resolved my issues. Appreciate the help provided here.
Stumbled upon the same problem but I'm using BizTalk 2010. I managed to solve the issue by referring to this article: www.mpspartners.com/.../BizTalk2010andAssemblyCache
My webservice application pool must use the same .NET Framework version with BizTalk, in this case v4. If not, both are not looking into the same version of assembly cache. Just to share if anyone else stumbled upon the same error.
Thanks Suzal.. I changed .Net version for my application pool and it started working for me as well..
Restarting host instances worked for me too! :D Thanks :)