I'm having this "underlying connection being closed" problem too. I am accessing TFS externally using https through a reverse web proxy.

First I tested from inside our network with the reverse web proxy configured as the TFS server. It didn't seem to have this trouble. Now I am at home with the same client machine (a laptop) and I get this problem. It isn't possible to interact well with TFS due to the error. My connection is on a FIOS network (15 mbps downlink, 2 mbps uplink), so I don't think bandwidth is the issue.

This is a really big problem because our company uses offshore teams, and we want them to user our TFS server. This is probably a use case scenario that gets more frequent all the time...