How do you desearialize a bool from Xml with custom true and false values?

Define another property that is hidden, which does the translation for you:

[XmlRoot(ElementName="response")]
public class Response()
{
  [XmlElement(ElementName="result")]
  private string ResultInternal { get; set; }

  [XmlIgnore()]
  public bool Result{
    get{
      return this.ResultInternal == "Success";
    }
    set{
      this.ResultInternal = value ? "Success" : "Failed";
    }
  }
}