Well if anyone is interested, I got the answer.
AS 4.1 getting stuck on connecting is usually due to firewall, VPN, or other such software.
First, open a command prompt (start > run > cmd) and run IPCONFIG to make sure that the Local Area Network connection is assigned an IP address. It should say 169.254.2.2.
Then try at the command prompt type
telnet 169.254.2.2 26675
More than likely port 26675 is being blocked so you'll get an error message.
That means you'll need to find out what software is blocking it and either disable or configure it to allow the connection.
I'm just glad I got it working now. Apparently my Zone Alarm was stopping the connection. Now to figure out how to keep ZA and the sync at the same time.