I don't know  if people are aware of the below exception. I wanted to throw some light on the issue, and help stranded people solve this issue.
Exception information:
Exception type: ArgumentException
Exception message: '', hexadecimal value 0x01, is an invalid character.

I support a web service which is heavily being used in the company, users who were consuming the web service where reporting problems that it was throwing some exception like above. After lot of investigation I solved the issue with  Bill's blog
Ascii control characters are not allowed in XML, they don't conform to xml specification.  So The .net framework when trying to serialize information with ascii control characters into XML , it throws an exception. These characters should not be allowed.

There are two ways to clean up the data and to remove the characters, you have to search the string , here is how you can do it.

/// <summary>
/// Remove illegal XML characters from a string.
/// </summary>
public string SanitizeXmlString(string xml)
{
    if (xml == null)
    {
        throw new ArgumentNullException("xml");
    }

    StringBuilder buffer = new StringBuilder(xml.Length);

    foreach (char c in xml)
    {
        if (IsLegalXmlChar(c))
        {
            buffer.Append(c);
        }
    }

    return buffer.ToString();
}

 
private string SanitizeXmlString(string xml)
{
 
   if (!string.IsNullOrEmpty(xml))
   {
     char[] hexp = new char[7] 
     { '\x00', '\x08', '\x10', '\x19', 
       '\x0B', '\x0F', '\x7F' };
     string pattern = string.Empty;
     pattern = string.Format("[{0}-{1}{2}-{3}{4}-{5}{6}]", 
     hexp[0], hexp[1], hexp[2], 
     hexp[3], hexp[4], hexp[5], hexp[6]);
     xml = Regex.Replace(xml, pattern, "");
    }
   
    return xml;  
}