While running Visual Studio 2012 behind a proxy, I received the following error message when checking for extension updates in the Visual Studio Gallery:
The remote server returned an unexpected response: (417) Expectation failed
A look around Google finally revealed a solution here:
http://www.jlpaonline.com/?p=176
Basically, he's saying the fix is to edit your devenv.exe.config file and change this:
<settings>
<ipv6 enabled="true"/>
</settings>
to this:
<settings>
<ipv6 enabled="true"/>
<servicePointManager expect100Continue="false"/>
</settings>
Thanks, Jeff!