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when ASP.NET throws an application error, IIS shows the 500 HTML error, but when a WCF service throws a FaultException (IIS 500), the client gets a proper SOAP fault with error message in it.

Is there any good documentation on this request processing?

A: 

This behavior is exactly how SOAP faults works.

Whenever the code within a Web service raises an exception, ASP.NET catches that exception >and transforms it into a SOAP Fault.

See this link for details

Sergey Mirvoda