I'm getting this error meassage, and it looks exactly like the problem here. http://community.landesk.com/support/message/24210#24210
I did have the Dynamic Bandwidth Throttling option checked, so I unchecked it and reset the package hash.
I get to step 3 and looking at the proxyhost.log file, I see a 0 where the responder says there should be a 200.
2008-05-28 13:53:05(6212-7768) proxyhost.exe:Made direct (non-proxy) connection to DEQ-SVRLANDESK:5007
2008-05-28 13:54:06(6212-7768) proxyhost.exe:127.0.0.1:4985 - - [28/May/2008:08:54:06 -0600] "CONNECT SERVERNAME:5007 HTTP/1.1" 0 92 524
Any ideas? I looks to me from the timestamps in the log file that the request times out. SQL server is up and running, and I restarted it to make sure it wasn't hung. Also restart Web Publishing service.