how do set a timeout for a method

You can run the method in a separate thread, and monitor it and force it to exit if it works too long. A good way, if you can call it as such, would be to develop an attribute for the method in Post Sharp so the watching code isn't littering your application.

I've written the following as sample code(note the sample code part, it works, but could suffer issues from multithreading, or if the method in question captures the ThreadAbortException would break it):

static void ActualMethodWrapper(Action method, Action callBackMethod)
{
    try
    {
        method.Invoke();
    } catch (ThreadAbortException)
    {
        Console.WriteLine("Method aborted early");
    } finally
    {
        callBackMethod.Invoke();
    }
}

static void CallTimedOutMethod(Action method, Action callBackMethod, int milliseconds)
{
    new Thread(new ThreadStart(() =>
    {
        Thread actionThread = new Thread(new ThreadStart(() =>
        {
            ActualMethodWrapper(method, callBackMethod);
        }));

        actionThread.Start();
        Thread.Sleep(milliseconds);
        if (actionThread.IsAlive) actionThread.Abort();
    })).Start();
}

With the following invocation:

CallTimedOutMethod(() =>
{
    Console.WriteLine("In method");
    Thread.Sleep(2000);
    Console.WriteLine("Method done");
}, () =>
{
    Console.WriteLine("In CallBackMethod");
}, 1000);

I need to work on my code readability.

Methods don't have timeouts in C#, unless your in the debugger or the OS believes your app has 'hung'. Even then processing still continues and as long as you don't kill the application a response is returned and the app continues to work.

Calls to databases can have timeouts.