Note: This is only for SCUP 3.0 or 4.0.  With SCUP 4.5 this is no longer an issue. 

I’ve received a couple of questions regarding System Center Updates Publisher (SCUP) when behind a proxy server. Some customers have reported problems downloading catalogs and updates when behind a proxy server.  To clarify, SCUP uses the proxy server settings set in Internet Explorer but is only able to connect through the specified proxy server when it allows anonymous access.  Therefore if your proxy server requires authentication you cannot use SCUP to download catalogs or publish updates to Windows Server Updates Service (WSUS).  You will get an error similar to “(407) Proxy Authentication Required”.  To manually workaround this issue you can do the following…

1. Manually download catalog.
2. Import catalog into SCUP.
3. Browse catalog and determine which updates you need in your environment.
4. Flag those updates to publish.
5. Manually download desired updates to a local share (download URL for each update can be found in “Modify Update Wizard – Select Package page”).
6. Update “Download URL (or UNC):” field in catalog using SCUP to point the update to the local share (found in “Modify Update Wizard – Select Package page”).
7. Publish updates to WSUS.

Hope this helps, if you have any questions please let me know.