Found out that this issue is with .net and Jboss7.1. So all clients that use .NET will suffer this Problem.
Solution is to set the Expect100Continue to 0 or false. What is Expect100Continue? Here is a blog post on it. http://alihamdar.com/2010/06/19/expect-100-continue/
Just before calling the New-WebServiceProxy , write the following line.
[System.Net.ServicePointManager]::Expect100Continue = $false
servicePoint.Expect100Continue = false;
Any other .NET client with a config file:
If this post resolved your issue, help others by selecting ACCEPT AS SOLUTION or adding a KUDO.