Data Sources
The Data source connection is where you will define where the data used by your web service is stored.
This can be a SQL server database on a remote server , or an AS/400 iSeries , or just about any Hardware platform that you have access to, all that's required is that you have the necessary OLeDB or ODBC drivers required to connect to the database.
Using this option, you will be able to define the connection string to be used by your web service, this will be stored in the Web.config file in the generated Web Service, please see Generating the Web Service for important notes on the Web.Config file.

A good source of connection strings can be found at http://www.connectionstrings.com
However please read the connections section as some adjustments are required for use with the Designer for Web Services.
Once you have selected the Data Source menu tab then click on the Properties icon to assign Data Source values.