Easiest way to create a Module in DotNetNuke 6 and to debug

I think you are attacking it from the wrong angle by trying to encode all posted data.

Note that a "<" could also come from other outside sources, like a database field, a configuration, a file, a feed and so on.

Furthermore, "<" is not inherently dangerous. It's only dangerous in a specific context: when writing strings that haven't been encoded to HTML output (because of XSS).

In other contexts different sub-strings are dangerous, for example, if you write an user-provided URL into a link, the sub-string "javascript:" may be dangerous. The single quote character on the other hand is dangerous when interpolating strings in SQL queries, but perfectly safe if it is a part of a name submitted from a form or read from a database field.

The bottom line is: you can't filter random input for dangerous characters, because any character may be dangerous under the right circumstances. You should encode at the point where some specific characters may become dangerous because they cross into a different sub-language where they have special meaning. When you write a string to HTML, you should encode characters that have special meaning in HTML, using Server.HtmlEncode. If you pass a string to a dynamic SQL statement, you should encode different characters (or better, let the framework do it for you by using prepared statements or the like)..

When you are sure you HTML-encode everywhere you pass strings to HTML, then set ValidateRequest="false" in the <%@ Page ... %> directive in your .aspx file(s).

In .NET 4 you may need to do a little more. Sometimes it's necessary to also add <httpRuntime requestValidationMode="2.0" /> to web.config (reference).

You can include the ASMX file by including a element in the <files> section:

<files>
 <file>
  <name>YourWebService.asmx</name>
  <path></path>
 </file>
</files>

Generally, you don't need to specify a path.

Alternatively, you can include a Resources.zip file with your package which will include any files other than those that DNN needs to process during installation (e.g. Assemblies and SqlDataProvider files).

The benefit of this is maintainability. Using Resources.zip will keep you from having to edit the manifest file over and over...

The contents of the zip file will simply be unpacked into the root module directory (e.g. /DesktopModules/YourModule/*). If there is a file structure within your zip file it will be maintained.

You'll want to add TheNameOfYourFile.zip To your manifest file under the element.

[snip]

<folder>
  <name>Your Module</name>
  <friendlyname>Your Module</friendlyname>
  <foldername>YourModule</foldername>
  <modulename>YourModule</modulename>
  <description>A module for DotNetNuke websites.</description>
  <version>01.00.00</version>
  <resourcefile>Resources.zip</resourcefile>
  <businesscontrollerclass></businesscontrollerclass>
  <modules>
    <module>

[/snip]

As for referencing it in your module - I suggest using:

<%=ResolveUrl("~/DesktopModules/YourModule/Services.asmx")%>