Hi,
1. One question when you said - " I just added a data connection to the lists service on one of my servers, drug the fields onto my form, previewed, executed the data connection ". Did you created data connection on the server and not on the subsite you have you list published?
I have it this way. I have a new site for my project. In that site I have this new document library form published. and I have data connections at the same place as well.
2. Is there any coding needs to be done in visual studio for building checkout web service? I don't have anything done in visual studio.
Shruti