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Why is this OK:

using (StringReader sr = new StringReader(response))
{
   try
   {
      retVal = xs.Deserialize(sr);
   }
    //yada yada yada
}>

Why and this isnt?

using (XmlTextReader xr = new XmlTextReader(new StringReader(response), /*...yada yada...*/)
{
   try
   {
      retVal = xs.Deserialize(sr);
   }
    //yada yada yada
}

>

Because StringReaders derive from System.IO.TextReader which implements IDisposable and that's what the using keywords cares about.  XmlTextReader derives from the abstract XmlReader, and noone implements IDisposable. I suppose this has something to do with closing streams in the right order, blah blah.  Either way, it was a minor sadness today.

Poop.