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We have an internal application written in Flex that uploads content to a .NET web handler for processing. We have periodic issues due to clients behind proxy servers where it will occasionally prompt them to connect to the proxy server before doing anything, but if they do, the application doesn't work properly.

If they cancel, the application returns a 407 error (correctly). If they hit OK (without providing any credentials), the application fails with an IOError. If they provide their credentials however, the application just hangs and the browser (IE8) needs to be forced shut.

Any ideas about proxy issues with Flash Player (10.1+) and how do get around them?