Once you succesfully upgrade from CRM 1.2 to CRM 3.0, you have to register within 30 days or the software will be disabled until it is registered. But suprisingly, you might notice that the registration fails even after repeated attempts if you are accessing internet using ISA Web-Proxy Client.
To troubleshoot, you have to look for registration errors found in C:\Documents and Settings\<Logged-in-user-at-the-time-of-registration>\Application Data\Microsoft\MSCRM\Logs\crmreg.log.
14:51:58| Info| Step3 – Register CRM
14:51:59| Error| The underlying connection was closed: Unable to connect to the remote server.
The remote server returned an error: (407) Proxy Authentication Required.
14:52:02|Warning| User choose to not complete registration
14:52:02|Verbose| Closing CRM registration wizard.
Oh, the famous error (407) Proxy Authentication Required.
So, its an ISA Proxy issue. You might want to disable authentication on outgoing ISA web proxy requests.
1. Open the ISA Management console. Right click on your server name and click the Properties command.
2. In the server’s Properties dialog box, click on the Outgoing Web Requests tab.
3. On the Outgoing Web Requests tab, remove the checkmark from the Ask unauthenticated users for identification checkbox.
Now, configure a Client Address set with IP Address of CRM Server and associate Protocol rule along with Site and Content Rules to allow anonymous access.
Run the Registration Wizard again and this time you should be able to register sucessfully (Write registration ID to CRM Database).