Interesting. I was hoping for something more obvious ... in your code.
If I understand correctly, you are unable to make ANY query work in this environment using the Silverlight Unit Test framework.
Is it true that these same queries work (a) when run as part of the silverlight application and (b) when run from a .NET client (e.g., a console application)? Please confirm these first.
The next step is to examine the server-side debug log. That is ALWAYS an important source of information for almost any problem related to a communication with the server. You may find more information about the exception there.
Feel free to send that debug.log, your web.config, and your Silverlight app.config to me at AskWard-at-ideablade-period-com (expressed this way to avoid spambots). Make sure you mask out any connection string info that we should not have!