I also have this problem. But I use Windows XP SP2 (Traditional Chinese).
After some tests, I find that the problem occurs if the DPI setting of the display is changed from 96 to 120.
It seems that some changes to the source AddWebReferenceDialog.cs can fix the problem:
this.urlComboBox.AutoSize = true;
//this.toolStrip.PerformLayout();
But I am not sure whether the changes will lead to other problems.