I had a colleague which was configuring Symantec Mobile Device Management. The event log was showing messages of a service trying to connect to an URL but failing with 407 proxy authentication required. As far as we knew no proxy settings were configured. Well they were at a point, but not now…

Here’s what led me to the solution: http://www.symantec.com/business/support/index?page=content&id=TECH127695

Delete these keys:

• HKEY_USERS\.DEFAULT\Software\Microsoft\Windows\CurrentVersion\Internet Settings\Connections\DefaultConnectionSettings
• HKEY_USERS\.DEFAULT\Software\Microsoft\Windows\CurrentVersion\Internet Settings\Connections\SavedLegacySettings

[Update] that same day I came across an identical issue but in SCCM with the Active Update Point configuration push towards WSUS.

From the WCM.log:

This SRVSCCM02.rdsolutions.local system is the Top Site where WSUS Server is configured to Sync from Microsoft Update (WU/MU) OR do not Sync.~ 
$$<SMS_WSUS_CONFIGURATION_MANAGER><02-23-2012 15:33:29.066-60><thread=4020 (0xFB4)>
Found WSUS Admin dll of assembly version Microsoft.UpdateServices.Administration, Version=3.0.6000.273, Major Version = 0x30000, Minor Version = 0x17700111~ 
$$<SMS_WSUS_CONFIGURATION_MANAGER><02-23-2012 15:33:29.120-60><thread=4020 (0xFB4)>
Found WSUS Admin dll of assembly version Microsoft.UpdateServices.Administration, Version=3.1.6001.1, Major Version = 0x30001, Minor Version = 0x17710001~ 
$$<SMS_WSUS_CONFIGURATION_MANAGER><02-23-2012 15:33:29.121-60><thread=4020 (0xFB4)>
The installed WSUS build has the valid and supported WSUS Administration DLL assembly version (3.1.7600.226)~ 
$$<SMS_WSUS_CONFIGURATION_MANAGER><02-23-2012 15:33:29.121-60><thread=4020 (0xFB4)>
System.Net.WebException: The request failed with HTTP status 407: Proxy Authentication Required ( The ISA Server requires authorization to fulfill the request. Access to the Web Proxy filter is denied. ).~~   at Microsoft.UpdateServices.Administration.AdminProxy.CreateUpdateServer(Object[] args)~~   at Microsoft.UpdateServices.Administration.AdminProxy.GetUpdateServer(String serverName, Boolean useSecureConnection, Int32 portNumber)~~   at Microsoft.SystemsManagementServer.WSUS.WSUSServer.ConnectToWSUSServer(String ServerName, Boolean UseSSL, Int32 PortNumber)  $$<SMS_WSUS_CONFIGURATION_MANAGER><02-23-2012 15:33:34.210-60><thread=4020 (0xFB4)>
Remote configuration failed on WSUS Server.~ 
$$<SMS_WSUS_CONFIGURATION_MANAGER><02-23-2012 15:33:34.226-60><thread=4020 (0xFB4)>

In the component status overview log:

And in words:

WSUS Synchronization failed.
Message: WSUS server not configured. Please refer to WCM.log for configuration error details..
Source: CWSyncMgr::DoSync.
  The operating system reported error 2147500037: Unspecified error