Connecting to SSRS Web Service

I know there was a lot of discussion about how to connect to the report server web service but I tried everything I read hear and couldn't get it to work for me. So I would appreciate if someone onthis forum can make a suggestion to solve it for me.
I have SSRS SQL 2008 R2 installed in Share Point mode. and I wrote a console app to use the web service. I created two proxies one that uses a service reference to http:\\<MyServer>/ReportServer/ReportService2010.asmx and one that uses web service reference to the same URL (I wasn't sure if there is a diffrence between the two).
I tried one simple API : Create Folder(...) and the service reference gave me an error of Security problem related to Annonimous login when NTLM is expected and the Web Reference complained about Unrecognized soap action - CreateFolder.
The code and the exact wording of the error messages are below. I appreciate any help I can get regarding this:

            //ReportService2005 is a service reference to ReportService2005.asmx
            ReportService2005.ReportingService2005SoapClient client = new ReportService2005.ReportingService2005SoapClient();
            client.ClientCredentials.Windows.ClientCredential = new System.Net.NetworkCredential("myname", "mypassword", "mydomain");
            System.ServiceModel.Security.UserNamePasswordClientCredential crd = client.ClientCredentials.UserName;
            crd.Password = "mypassword";
            crd.UserName = "myname";
            ClientCredentials cr = client.ClientCredentials;
            ReportService2005.CatalogItem item1 = new ReportService2005.CatalogItem();
            client.CreateFolder(null, "xxx", "\\", null);
            //Getting the error: 
            //The HTTP request is unauthorized with client authentication scheme 'Anonymous'. 
            //The authentication header received from the server was 'NTLM'.

            //WSReportingService2005 is a web reference to ReportService2005.asmx
            WSReportingService2005.ReportingService2010 rs = new WSReportingService2005.ReportingService2010();
            rs.Credentials = new NetworkCredential("myname", "mypassword", "mydomain"); 
            rs.Url = "http://sql2008_dev/reportserver/reportservice2005.asmx";
            WSReportingService2005.CatalogItem item = null;
            item = rs.CreateFolder("xxx", "\\", null);
            //Getting the error:
            //Server did not recognize the value of HTTP Header SOAPAction: 
            //http://schemas.microsoft.com/sqlserver/reporting/2010/03/01/ReportServer/CreateFolder.

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