C# webservice using XmlDocument as parameter to insert data to SQL Server table.

Please refer below link

http://stackoverflow.com/questions/4896213/passing-xml-document-as-an-parameter-to-web-services-in-c-sharp

also you can pass path as parameter an load it on service side like below

C#

[WebMethod]
public void WriteXMLData(string path)
{
    XmlDocument doc = new XmlDocument();
    doc.Load(path);
    //PARSE XML AND INSERTS TO SQL TABLE GOES HERE
}

I hope this will help you out.