After three days of searching, the solution fell into my lap.
Now, what happened was VS tried to do an automatic update but was stopped by the proxy. I was prompted for credentials and the check took place.
I was inspired to check the TFS server connection just for kicks in case that prompt would possibly establish a connection for the TFS server to tunnel through… lo and behold! It worked!
- Open TOOLS>Extensions & Updates
- Click on Updates… in the left-hand menu
- There will be a failure notice on screen and a link to enter your credentials. Click it and enter them.
- Close the Extension manager.
- Click TEAM>Connect to TFS server…
- Enter the address and it will work!
Note: Some have suggested trying to use the proxy credential prompt by opening the integrated browser but this has not worked. I am not an expert but I think they are connecting through different channels within windows itself.
There is no editing of devenv.exe.config required for this to work.
It will be a pain to have to check for updates manually every time you need to connect to the server, but this is the best solution I have come up with until Microsoft fixes this issue permanently with an update or future release.