.net webservice load problem

Hi all,

I've been developing a webservice which accepts xml messages and processes them. It all works well apart from the userload it can take.

Each request can/will generate +/- 4 threads avg doing a http webrequest which is used to find data on webpages/webservices.
Each http webrequest can/should take betwee 5-15 secs. This is because the webservices/systems behind it can take that long processing a request. This IS normal and nothing we can change

The problem arises tho when we went stress/load testing the webservice. We could only get a max of +/- 50 users when we had an avg of 10 secs delay in the request. The cpu usage was below 15% and enough memory available as well.
The number of threads reached about 120 for the ASPNET_WP.EXE process which seems to mean the aspnet worker process reached it's thread limit.

max 50 users is not acceptable for my current project so I hope some1 here can give me some suggestions where to look/ how to solve it.

I know there's a thread limit you can set on a machine basis, however I dont think this can be stretched infinitely nor is it good for system performance.

It's also not (i think) a limit of IIS because else I should get an http error which i dont get. I just get a really really slow response (50 secs, with only a 10 secs delay. I've also measured the time from when the webmethod gets called and when it's ended and it's only there for like 10 secs. The 40 secs are somewhere out of that scope)

The system we're running it on is a dual p3 1.3 ghz, 512mb ram using windows 2k and iis 5.0)

Any1? :S