I also encountered a similar error when trying to generate the client for a web service from an ASP .Net MVC 4.0 project using Visual Studio 2012.
The root of the problem seems to be that fact that the project from where I was trying to generate the client was referencing an assembly which in turn was dependent on another assembly that was not being referenced as well.
When "Reuse types in referenced assemblies" is enabled in the service configuration, the service generator is probably inspecting all the referenced assemblies to get a list of types that can be reused. The fact that one of the referenced assemblies is referencing another assembly which is not available is probably causing the generator to fail.
Unchecking "Reuse types in referenced assemblies" from the service configurations will solve the above problem, but there is a side effect to it. The reuse types option is there for a reason and in some cases it avoids unnecessary casting in the code consuming the service.
For example, if the service itself is built using WCF and some methods parameters inside it are of type System.Guid, they will be translated to strings in the generated client if the reuse types option is disabled.
An alternative that I prefer to disabling reusing types is to add the service reference from Class Library project specifically created for that purpose. The one thing to keep in mind is to copy all the service related configurations from the class library's app.config to the configuration file of the startup project.
If there are types defined in local assemblies that need to be reused in the service client, those assemblies simply need to be referenced from the above mentioned class library project, along with all their dependencies.