Hi Phil,
I had this same problem this morning during an on-line client meeting and was taken by surprise. I took two actions to get around this:
Added the following to machine.config on the client machine:
<system.net>
<defaultProxy enabled="true" useDefaultCredentials="true"/>;
</system.net>
This change allow the ClickOnce install to at least begin but then I kept getting download errors after about 64K which suggested a corrupted file or inability to find the manifest in a portable executable but I was having no trouble installing to some other machines.
Finally, I just modified the Internet Explorer settings and then the install worked.
Tools, Internet Options, Connections, LAN Settings, then
Unchecked "Use a proxy server" which was the only item checked.
Checked "Automatically detect settings" leaving nothing else checked.
I would also appreciate any illumination as to more viable workarounds or practices to follow when using ClickOnce.
Regards,
Chris