[E2007] [EWS] [C#] Internal Server Error on Item.Update()

I'm using the EWS API in C# with an onsite Exchange 2007 SP1 Server. I'm using the following code to tag a message using a custom property definition. 

//Bind to the message in question, which works fine. 
Item m = Item.Bind(service, new ItemId(itemid));

//Define the extended property definition. 
ExtendedPropertyDefinition def = new ExtendedPropertyDefinition(MyGUID, "my-tag-name" MapiPropertyType.String);

//Set the extended property to our tag which is a string 
m.SetExtendedProperty(def, tag);

//Starting tracing, see XML snippet below. 
service.TraceEnabled = true; 

//Update the message with our new tag.                 
i.Update(ConflictResolutionMode.AlwaysOverwrite);

The issue is the server is throwing "Internal Server Errors' in response as shown in the trace below. Its not a general issue with credentials/autodiscover as I'm able to bind to messages and retrieve information about them without an issue. 

Does anyone have any ideas? 

<Trace Tag="EwsRequestHttpHeaders" Tid="1" Time="2014-03-03 12:52:49Z">
POST /EWS/Exchange.asmx HTTP/1.1
Content-Type: text/xml; charset=utf-8
Accept: text/xml
User-Agent: ExchangeServicesClient/15.00.0516.014
Accept-Encoding: gzip,deflate</Trace><Trace Tag="EwsRequest" Tid="1" Time="2014-03-03 12:52:49Z" Version="15.00.0516.
014"><?xml version="1.0" encoding="utf-8"?><soap:Envelope xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" xmlns:m="
http://schemas.microsoft.com/exchange/services/2006/messages" xmlns:t="http://sc
hemas.microsoft.com/exchange/services/2006/types" xmlns:soap="http://schemas.xml
soap.org/soap/envelope/"><soap:Header><t:RequestServerVersion Version="Exchange2007_SP1" /><t:TimeZoneContext><t:TimeZoneDefinition Id="GMT Standard Time" /></t:TimeZoneContext></soap:Header><soap:Body><m:UpdateItem MessageDisposition="SaveOnly" ConflictResolution="AlwaysOver
write"><m:ItemChanges><t:ItemChange><t:ItemId Id="<<Removed>>=" ChangeKey="<<Removed>>" /><t:Updates><t:SetItemField><t:ExtendedFieldURI PropertySetId="2b3c76fb-2ea6-4644-a9d1-ae5b5
8b4396b" PropertyName="mytag" PropertyType="String" /><t:Message><t:ExtendedProperty><t:ExtendedFieldURI PropertySetId="2b3c76fb-2ea6-4644-a9d1-a
e5b58b4396b" PropertyName="mytag" PropertyType="String" /><t:Value>tagvalue</t:Value></t:ExtendedProperty></t:Message></t:SetItemField></t:Updates></t:ItemChange></m:ItemChanges></m:UpdateItem></soap:Body></soap:Envelope></Trace><Trace Tag="EwsResponseHttpHeaders" Tid="1" Time="2014-03-03 12:52:49Z">
HTTP/1.1 200 OK
Content-Encoding: gzip
Vary: Accept-Encoding
Content-Length: 551
Cache-Control: private, max-age=0
Content-Type: text/xml; charset=utf-8
Date: Mon, 03 Mar 2014 12:52:49 GMT
Server: Microsoft-IIS/7.0
X-AspNet-Version: 2.0.50727
X-Powered-By: ASP.NET</Trace><Trace Tag="EwsResponse" Tid="1" Time="2014-03-03 12:52:49Z" Version="15.00.0516
.014"><?xml version="1.0" encoding="utf-8"?><soap:Envelope xmlns:soap="http://schemas.xmlsoap.org/soap/envelope/" xmlns:xs
i="http://www.w3.org/2001/XMLSchema-instance" xmlns:xsd="http://www.w3.org/2001/
XMLSchema"><soap:Header><t:ServerVersionInfo MajorVersion="8" MinorVersion="1" MajorBuildNumber="4
36" MinorBuildNumber="0" Version="Exchange2007_SP1" xmlns:t="http://schemas.micr
osoft.com/exchange/services/2006/types" /></soap:Header><soap:Body><m:UpdateItemResponse xmlns:t="http://schemas.microsoft.com/exchange/servi
ces/2006/types" xmlns:m="http://schemas.microsoft.com/exchange/services/2006/mes
sages"><m:ResponseMessages><m:UpdateItemResponseMessage ResponseClass="Error"><m:MessageText>An internal server error occurred. The operation fail
ed.</m:MessageText><m:ResponseCode>ErrorInternalServerError</m:ResponseCode><m:DescriptiveLinkKey>0</m:DescriptiveLinkKey><m:Items /></m:UpdateItemResponseMessage></m:ResponseMessages></m:UpdateItemResponse></soap:Body></soap:Envelope></Trace>