I assume that you are trying to connect to the site via a proxy server.
The proxy server is likely the cause of the problem and the fact that DIFS does not authorise via a proxy very well.
Either use a direct connection.
You might be able to get it working by modifying difs.exe.config with your authentication settings.
<configuration> <system.net> <defaultProxy enabled="true" useDefaultCredentials="true"> <proxy bypassonlocal="True" proxyaddress="http://100.100.300.200:8080
/> </defaultProxy> </system.net></configuration>
Let me know if you have any success with this since DIFS has not been tested with a proxy server to date and it would be interesting to here peoples experience of it.