Update Service Reference is not working in WCF
uncheck the Reuse types in referenced assemblies checkbox and put address of your new service in Address textbox.
While configuring service reference append /mex (address of your end point with mexHttpBinding ) at the end of your service URL.
This will enable metadata exchange. So Reference.cs will be modified / added (if you are adding service reference for the first time).
Edit : On analysis I found that this issue happens when a service (which implements one ServiceContract) is exposed via more than one end point.
This issue can be avoided by using different Service Contracts (Interface) for each end point and making the service class (service1) implement all these Interfaces.
If you cannot browse the URL, then you will not be able to add the service reference. Try hosting your web service locally in IIS. When you're able to browse the URL, then you can add the service reference.