At microsoft’s recomendations we changed the code to update BOTH the fields for an MMS field as shown below :-
batchElement.InnerXml = “<Method ID=’1′ Cmd=’Update’>”
+ “<Field Name=’ID’>3</Field>”
+ “<Field Name=’Title’>Modified through lists.asmx web service 1</Field>”
+ “<Field Name=’Country’>3;#Germany</Field>”
+ “<Field Name=’Continent’>2</Field>”
+ “<Field Name=’ContinentTaxHTField0′>0;#Northamerica|d511f3c7-377f-480f-aff6-beebecd3c675</Field>”
+ “</Method>”;
I also found that the pointer “<Field Name=’Continent’>2</Field>” could be set to 0 if the term was not already in the hidden list. ie “<Field Name=’Continent’>0</Field>”
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