Cross zone problem in Silverlight 3?

I maintain a Silverlight application that is served remotely and accesses a local WCF service via the HttpP开发者_Go百科ollingDuplex binding. Communication with the local service works on my development box when I use 127.0.0.1 as the address but not when I use localhost or the machine name. Conversely, in production localhost works for the service address but 127.0.0.1 does not. The local service implements both a client access and a cross domain policy.

When communication fails the browser reports an asynch callback error. When I attach with .NET Framework source stepping enabled I get an "Attempted to perform an unauthorized operation" error. I've searched and banged my head on this for hours. What is going on?

My client requires the application to run on Silverlight Runtime 3.0.40624, IE6 and Windows Server 2003. My client provides no more concerning the machine configuration.

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This could be caused by a web proxy, which is returning the error message.

Different environments could be configured to bypass the web proxy for different addresses.