K2 blackpearl 4.6.2 (4.12060.1520.0)

I am getting following error while opening connection using SourceCode.Workflow.Client.dll.

 var connection = new Connection();
connection.Open(k2ServerName, builder.ConnectionString);

Error: "The server cannot handle directory requests."

I am using username & password in the connection string and Integrated=False;

username used is the K2 service id and it is an admin in the K2 machine.

When I use Integrated=True, it works fine.

Is this a known issue?

Stack Trace:

at SourceCode.Workflow.Client.InternalConnection.Call(ArchiveX ar, MessageType msgtype)
   at SourceCode.Workflow.Client.InternalConnection.AuthenticateExternal(String constr)
   at SourceCode.Workflow.Client.InternalConnection.Authenticate()
   at SourceCode.Workflow.Client.Connection.Open(String Server)
   at SourceCode.Workflow.Client.Connection.Open(String Server, String ConStr)

Thanks
Vinoy S