Cannot connect to K2.net Server:

I am creating a workflow using the infopath process wizard in the k2.net studio. I am not able to connect to my development server through the wizard, i receive the following error.

Cannot connect to the K2.net Server: [servername] on port 5252. Would you like to ignore this warning.

I am not seeing an error in my http trace tool. I am actually seeing a true returned from the Infopath, can i connect web service. However i am getting back an unauthorized from this request. Can you tell me what else is happening with the wizard that would cause this error?

Thanks,
Tina