Web service/WCF service itself return a XML document in form SOAP message so you cannot return XML document in it. So you will have to use XmlElement.
[WebMethod(Descrption = "Return XML document")]
public XmlElement GetXMLDoc(string documentName)
{
XmlDocument doc = new XmlDocument();
doc.LoadXml("<xDoc> <xElement xE="Value"/> </xDoc>");
return doc.DocumentElement();
}