create table TestTable
(
	Id int PRIMARY KEY,
	XmlField nvarchar(max)
)

static void Main(string[] args)
        {
            var contents=File.ReadAllText("Castle.Core.xml");

            using (var connection = new SqlConnection(Settings.Default.TestConnection))
            {
                var cmd = new SqlCommand("insert into TestTable (ID,XmlField) VALUES(@id,@xmlField)",connection);
                var paramXml=cmd.Parameters.Add("@xmlField", SqlDbType.NText);
                var paramId = cmd.Parameters.Add("@id", SqlDbType.Int);
                paramId.Value = 1;
                paramXml.Value = contents;

                connection.Open();
                cmd.ExecuteNonQuery();
            }

            using (var connection = new SqlConnection(Settings.Default.TestConnection))
            {
                var cmd = new SqlCommand("select XmlField from TestTable where ID=1", connection);
                
                connection.Open();
                var result=(string)cmd.ExecuteScalar();
                Debug.Assert(result.Length==contents.Length);

            }
        
        }

cmd.Parameters.AddWithValue("@xmlField", contents);

USE [mwIBS]
GO
/****** Object:  StoredProcedure [dbo].[sp_InsertTrace]    Script Date: 10/10/2011 11:37:58 ******/
SET ANSI_NULLS ON
GO
SET QUOTED_IDENTIFIER ON
GO
ALTER PROCEDURE [dbo].[sp_InsertTrace] 
	@Service varchar(100),
	@Method varchar(100),
	@RequestXML xml,
	@ResponseXML xml,
	@RequestObject varchar(50),
	@ResponseObject varchar(50)
AS
BEGIN
-- InsertTrace
INSERT INTO Traces
(
	Service,
	Method,
	RequestXML,
	ResponseXML,
	RequestObject, 
	ResponseObject
)
VALUES
(
	@Service,
	@Method,
	@RequestXML,
	@ResponseXML,
	@RequestObject,
	@ResponseObject
);
SELECT SCOPE_IDENTITY();

END

    public Trace InsertTrace(Trace trace)
    {
      using (SqlConnection Conn = new SqlConnection(Properties.Settings.Default.connectionString))
      {
        Conn.Open();
        using (SqlTransaction trans = Conn.BeginTransaction())
        using (SqlCommand cmd = new SqlCommand("sp_InsertTrace", Conn, trans))
        {
          cmd.CommandType = CommandType.StoredProcedure;
          cmd.Parameters.Add(new SqlParameter("@Service", trace.Service));
          cmd.Parameters.Add(new SqlParameter("@Method", trace.Method));
          cmd.Parameters.Add(new SqlParameter("@RequestXML", trace.RequestSqlXml));
          cmd.Parameters.Add(new SqlParameter("@ResponseXML", trace.ResponseSqlXML));
          cmd.Parameters.Add(new SqlParameter("@RequestObject", trace.RequestObjectName));
          cmd.Parameters.Add(new SqlParameter("@ResponseObject", trace.ResponseObjectName));
          trace.TraceId = Convert.ToInt32(cmd.ExecuteScalar());

          foreach (TraceCriterion traceCriterion in trace.TraceCriteria)
          {
            traceCriterion.TraceId = trace.TraceId;
            InsertCriterion(traceCriterion, Conn, trans);
          }

          trans.Commit();
          Conn.Close();
          return trace;
        }
      }
    }

    private TraceCriterion InsertCriterion(TraceCriterion traceCriterion, SqlConnection conn, SqlTransaction trans)
    {
      using (SqlCommand cmd = new SqlCommand("sp_InsertTraceCriterion", conn, trans))
      {
        cmd.CommandType = CommandType.StoredProcedure;
        cmd.Transaction = trans;
        cmd.Parameters.Add(new SqlParameter("@TraceId", traceCriterion.TraceId));
        cmd.Parameters.Add(new SqlParameter("@Criterion", traceCriterion.Criterion));
        cmd.Parameters.Add(new SqlParameter("@CannedValue", traceCriterion.CannedValue));
        traceCriterion.TraceCriterionId = Convert.ToInt32(cmd.ExecuteScalar());
        return traceCriterion;
      }
    }

create table TestTable
(
	Id int PRIMARY KEY IDENTITY,
	XmlField varchar(max)
)

ALTER PROCEDURE [dbo].[sp_InsertTest] 	
	@XML varchar(max)
AS
BEGIN
INSERT INTO TestTable
(
	XmlField
)
VALUES
(
	@XML
);
SELECT SCOPE_IDENTITY();

END

decimal newID ;
using (var connection = new SqlConnection(Settings.Default.TestConnection))
{
        var cmd = new SqlCommand("sp_InsertTest", connection);
        cmd.CommandType = CommandType.StoredProcedure;
        //var paramXml = cmd.Parameters.Add(new SqlParameter("@XML", contents));
        cmd.Parameters.AddWithValue("@XML", contents);

        connection.Open();
        newID= (decimal) cmd.ExecuteScalar();                
}

return this.Add(new SqlParameter(parameterName, value));