That error up there has been causing me some head scratching. I couldn’t figure out what the problem was, and it causes issues with different parts of WordPress. I was seeing it on the Dashboard but it stops things like upgrades and plugins installing. I tried different solutions, adding .htaccess files etc etc. None of it looked that convincing, and none of it worked. Then one evening, this evening in fact, as I uploaded the newest version of WordPress (3.2) because the automatic update wouldn’t work it occured to me that I hadn’t tried poking the firewall.
It was the bloody firewall! Blocking all outgoing connections. Although this is good for security its not good for WordPress. So if you are seeing this error and have tried everything else. Take a look at your firewall. I wish I had weeks ago.