Hi GrindCrusher and welcome!
First, check that when you open the form in the browser, the zone is Local Intranet? If your browser shows "Internet" try adding the "webservices.domain.com" to your local intranet sites and see if that fixes the issue.
Second, if you are publishing a full trust form, you'll need to make sure you Admin Deploy it so that IPFS (SharePoint's browser logic) can display it correctly. Maybe you haven't done that. Search our site for a blog post regarding admin deploy.
Third thought, well what's the Web Service doing? Is it set up to submit to a database? Is it impersonating the user or some other account?