I tried to reproduce your testing with the below sample service like:
WmPublic/pub.xml:xmlStringToXMLNode
WmPublic/pub.xml:xmlNodeToDocument
<abc:HandlerEvents xmlns: xsi="http:/ - server goes in hung state.
<abc:HandlerEvents xmlns: xsi="http:/ (space after slash) - works fine
<abc:HandlerEvents xmlns: xsi="http: - works fine
Lets see what other experts say about this 
#Flow-and-Java-services#webMethods#Integration-Server-and-ESB