Could you please try to add the ScriptService attribute for the WebService1 class (in WebService1.asmx.cs)? Following snippet code shows how:

/// <summary>/// Summary description for WebService1/// </summary>
[WebService(Namespace = "http://tempuri.org/")]
[WebServiceBinding(ConformsTo = WsiProfiles.BasicProfile1_1)]
[System.ComponentModel.ToolboxItem(false)]
// To allow this Web Service to be called from script, using ASP.NET AJAX, uncomment the following line. 
[System.Web.Script.Services.ScriptService]
public class WebService1 : System.Web.Services.WebService
{
	[WebMethod]
	public List<Item> GetItemList()
	{
		...
	}
}

but for some reason webcombo only shows loading

I suspect that WebCombo keep showing loading indicator because the WebService method is not allowed to be called. Adding the ScriptService attribute for the WebService1 class should resolve the problem.

If the problem still persist, please feel free to let me know.

and onvalue change server event (OnValueChanged) need to fire to handle

OnValueChanged event handler is not fired when WebCombo is bind to WebService. For more detail, please kindly check "The Differences with Server Data Binding" section in WebCombo online documentation.

To achieve the same post-processing in client binding mode, handle the OnAfterItemSelected client-side event.

Hope this helps.

Webcombo need to support autocomplete also.

Auto complete entry mode works on WebCombo with client-binding (to WebService) enabled. Check out how the feature works on the Country WebCombo in this live sample page of WebCombo.

Sorry for the delay in sending this.

I have prepared a working WebApplication created based on your provided code. Please find ClientBindingAndAutoComplete.zip in the attachment and let me know whether it helps or not.