I am going to make an application for my N810 that would make Web Service calls to a server to fetch some information and display it on the screen etc. I have done absolutely nothing for this platform so I though I'd ask you people for some insight.

Which would be the best language to start with? Are there any ready libraries for language X to handle the xml hell in Web Service?

I installed the python runtime for maemo but haven't yet tested any programs written with python and the ruby project seems to be in technical trouble. Mono might be a good solution using C# but does Mono install to OS2008? The one click install on their site does not work...

Python is almost certainly your best choice. It's what I'd use anyway

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I tried even porting some SOAP library to process SOAP messages but the documentation for them was confusing or the project seemed dead. So I opted to use SAX parser and parse each message. Dunno if that's optimal solution but it works. You got SAX, DOM and element tree parsers just for XML and different implementations of those. See expat, libxml2 and sax libraries. The python documentation is good and there are plenty of examples in the Internet. Oh yeah... the python parsers usually are IIRC just wrappers for libraries implemented in C-language so the performance is good.