When running the Microsoft CRM Registration Wizard you might bump into the following error:

“The wizard requires an Internet connection to complete registration. Activate your Internet connection if it is disabled. If you do not have an Internet connection, contact Microsoft Business Solutions Support at 1-800-456-0025 to complete registration.”

This happens even if you have internet connection.

There are 2 reasons for this:

1. There may be incorrect information in the Registration wizard. A valid state/province must be provided in the State/Provice field on the Partner Company Information screen.
2. Microsoft .NET 1.1 is not able to successfully autodetect proxies. You have to make sure a valid proxy client is installed and/or the settings in Microsoft IE indicates a valid proxy server.

Source

http://blogs.msdn.com/crm/archive/2006/09/19/762184.aspx