i came across this thread and having a similar issue with the exact same error message.
i took a look at the windows\microsoft.net\framework\v2.0.50727\config\web.config containing:
<system.net>
<defaultProxy>
<proxy usesystemdefault="true" />
</defaultProxy>
</system.net>
so its set to use IE's proxy settings which are disabled (no proxy beeing used)
from the documentation of the .net i tried to change the above config part to <defaultProxy enabled="false"> but didnt help either
i did the exact same file changes to the Framework64\v.2.0.50727.... config file as well
i will now try to manually specify a proxy in those .net settings which does exist to see if that helps...
tested, didnt change a thing. i wonder if you have to reboot after changing .net's settings?