Some client binding sample with web service is already provided in the WebGrid sample which you could view and analyse. These samples are:

- ClientBinding_BatchUpdate.aspx
- ClientBinding_Paging.aspx
- ClientBinding_VirtualGroupPaging.aspx
- ClientBinding_WebService.aspx

Regarding the select parameter, you could use the Tag property in the SelectDataSourceArguments object. You will need to set the property during the selecting client side method and parse the Tag property during the select server side event. Here is the snippet:

Selecting client side event:

<script type="text/javascript" language="javascript">
    function GetCustomers_Selecting(control, selectArguments) {
        selectArguments.Tag = "CategoryID=1;";
    } 
</script>

Client binding settings:

<ClientBindingSettings DataSourceType="WebService" ServiceUrl="WebService.asmx">
    <ServiceEvents Selecting="GetCustomers_Selecting" />
    <ServiceMethods SelectMethod="GetProducts" />
</ClientBindingSettings>

Select method definition:

[WebMethod]
public object GetProducts(DataSourceSelectArguments selectArguments)
{
    string selectParam = selectArguments.Tag;

    //Process selection
}