I am trying to create a query in my domain service (VS 2010 Silverlight Business Application) that returns the results from inspection readings that came out as a specific value
The problem is precisely because you've called ToList(). You've declared that you're returning IQueryable<LocationStatusList>, and List<T> doesn't implement IQueryable<T>.
Options (pick one):
ToList callIEnumerable<LocationStatusList>, IList<LocationStatusList> or possibly List<LocationStatusList>Call AsQueryable() after ToList():
... as before ...
.ToList().AsQueryable();
Note that you don't need the type argument in the ToList call - it's the same one that the compiler would infer anyway.