1.You created web reference to your service - and entities was generated according to service data contract. This entities is your model.
2.If you need to decorate it by some ASP.NET MVC specific attributes - you can create other entities with same properties, create repository that get data from service and convert it to your entities and provide only methods needed - that's good practice.
3.Additionally, if you do some transformation and have some business rules - you can create business logic class, that call repository method, check and execute business rules. But if you only display data from service - don't create logic business class.
4.You call your logic/repository methods from controller and pass it to view.
View is responsible only for displaying model, never call services from it!