I had an issue where my app would incorrectly report ‘location services’ when attempting to submit for certification. The problem turned out to be two classes in WP7Contrib using the Microsoft.Phone.Controls.Maps and System.Device.Location namespaces. When the capability detection tool runs, it checks for any use of a namespace, not just methods that actually check the user’s location. Unfortunately you can’t override it in the WMAppManifest.xml file – which begs the question of why even have the flags there if all they do is increase the chances of an exception.
Anyway, to fix the problem you need to comment out two classes in WP7Contrib.Common. In ‘Serialization’ are ‘SerializeGeoCoordinate’ and ‘SerializeLocationRect’. Comment out these classes in their entirety and re-build both WP7Contrib.Common and your app. Your app should no longer be incorrectly detected as using location services.