Encoding on Dropdownlist items
A few comments - 

It seems that while your code should work fine as is, it could be improved in the following ways:

A. It seems like you have three methods here when only one or two would be necessary. You may have your reasons for doing this, but the "middle-man" method "EncodeDropDownItem" seems superfluous.

B. The way you are hard-coding the calls to sb.replace, one at a time and with target/replacement values "inlined" might be more effective if they were preformed within a looping structure, with the Axss tags and replacement values retrieved from a custom dictionary. The hard-coded Axss tags and related character representations could then be encapsulated within that custom dictionary class, and re-used in other contexts if necessary. 

You may have your reasons for structuring your methods the way you have. However, I make the below suggestions for your code. Note that I am not able to test this, but hopefully you or some other forum readers will catch anything I screw up here . . .

FIRST - a custom dictionary for the Axss tags/values:

    class AntiAxssDictionary : Dictionary&lt;String, String&gt;
    {
        public void AntiAxssDictionary()
        {
            this.Add("&amp;#38;", "&amp;");
            this.Add("&amp;#60;", "&lt;");
            this.Add("&amp;#62;", "&gt;");
            this.Add("&amp;#34;", "\"");
            this.Add("&amp;#92;", "\\");
        }
    }


THEN, a minor rearrangement of your methods (this might be a matter of taste, or function, but this is how I would do it, given what little I know about your code):

    // raising the databound event to to encoding
    protected void ddlCountry_DataBound(object sender, EventArgs e)
    {
        if (ddlCountry.Items.Count &gt; 0)
        {
            //Initialize an AntiAxssDictionary object:
            AntiAxssDictionary tokenProvider = new AntiAxssDictionary();

            foreach (ListItem list in ddlCountry.Items)
            {
                // Encode the AntiAxss string here:
                StringBuilder sb = new StringBuilder(AntiXss.HtmlEncode(list.Text));

                // Iterate through the Axss tags stored as keys in the dictionary:
                foreach (String token in tokenProvider.Keys)
                {
                    // Attempt a replacement for each of the possible
                    // values in the Axss dictionary:
                    sb.Replace(token, tokenProvider[token]);
                }

                // Assign the new value to the list.text property:
                list.Text = sb.ToString;
            }
        }
    }


Hopefully I didn't butcher anything too badly here. I am in the midst of migrating from vb.net to C#, and learning Java at the same time. Hope that helps, and I will be interested to hear commentary and critique from other forum members.