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Business Connector Won't Connect

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Having a hard time with Dynamics AX 2012 R3 and the business connector. I have set it up according to what Microsoft specify. They also provide some code to test the connector.

Below is a snippet

using System;
using System.Collections.Generic;
using System.ComponentModel;
using System.Data;
using System.Drawing;
using System.Linq;
using System.Text;
using System.Threading.Tasks;
using System.Windows.Forms;
using Microsoft.Dynamics.BusinessConnectorNet;

namespace LogOnAsExample
    public partial class Form1 : Form
        public Form1()

        private void button1_Click(object sender, EventArgs e)
            // Create an instance of the Axapta class.
            Axapta DynAx = new Axapta();

            // Add the proxy user.
            // Replace the ProxyUserID and password parameters with the 
            // proxy user name and password that you specified
            // in the Business Connector Proxy.
            System.Net.NetworkCredential nc = new System.Net.NetworkCredential("axproxy", "password", "");
            string strUserName = "axproxy";

            // Test the connection to the .NET Business Connector.
                DynAx.LogonAs(strUserName.Trim(), "", nc, "", "", "", "");
                MessageBox.Show("Logoff completed.");

            catch (Exception ex)


When I click run on the program and test it, I get this error;


If I create this user as a user in AX then I get a successful connection. Can't work out why the actual connector won't work.

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