Visual Studio 2012 cannot connect to Team Foundation service unless the Fiddler is opened?

Up until recently, everything worked just fine.

However, now, I can no longer connect to Team Foundation Service unless the Fiddler is opened?! A couple days ago, I've setup the Fiddler according to the configuration tips DecryptHttpS and tip2 and the issues began to occur.

This is the message I get when I try to connect.

enter image description here

I've tried

turning off decrypt https
removing all Fiddler certificates
uninstalling Fiddler
removing all cookies from IE
...

and many other things that crossed my mind, but with no success. Seems like VS just can't get to TFS without it.

Meanwhile, I can view the TFS perfectly from browser. (And yes, opening a new instance of VS from home page of TFS doesn't work either)

Any suggestions?

Solution

Finally managed to get to the bottom of this. The issue was caused by the following entry in the machine.config in C:\Windows\Microsoft.NET\Framework\v4.0.30319\Config and C:\Windows\Microsoft.NET\Framework64\v4.0.30319\Config

  <system.net>
    <defaultProxy enabled = "true" useDefaultCredentials = "true">
      <proxy autoDetect="False" bypassonlocal="False" proxyaddress="http://127.0.0.1:8888" usesystemdefault="False" />
    </defaultProxy>
  </system.net>

Once I got rid of it, everything started working again.