Hi techie,
We are having exactly the same issue today, It was working fine yesterday. We have a similar setup using VS2017 Community with Students O365 accounts, Also tried our Backup Broadband connection with no firewall or Proxy Server and get the same results. I have now put it down to a Microsoft issue and was on here looking to see if anyone had a similar problem to verify my suspicions. Also tried Hotmail accounts etc. rather than enterprise O365 accounts and no difference.
From looking at Wireshark traces its connecting to our proxy fine and traffic is being sent back and forth when the request licence file is pressed but the error is still given.
We have Sophos UTM's so its not a Smoothwall issue either. Was going to see how it looks on Monday now as I have ruled out most things here.
Ben