Copy the folder inetpub\wwwroot\BiblioServices to the corresponding folder on your local web server.

Launch the Internet Information Services Applet from the Administrative Tools Menu, navigate to and then select properties on the BiblioServices Folder. On the Directory tab under Application Settings click the Create button, and then click the Apply button.

You can then launch the BiblioServices Solution (.sln) file. 

In the Solution Explorer right mouse click on Service1.asmx and select "Set As Start Page"

You should now be set up for testing.