Quick and easy steps to overcome proxy authentication issue on Android SDK and AVD Manager installation.

1. Download NTLM Authorization Proxy Server for Windows http://tredosoft.com/ntlm_proxy_server

2. Unzip and edit the setting in server:

PARENT_PROXY: <proxy ip address or server name>
PARENT_PROXY_PORT: <proxy port>
NT_DOMAIN: <domain name>
USER: <proxy username>
PASSWORD: <proxy password>

3. Execute the NTLM Authorization Proxy Server. Enable it on windows firewall if asked. In case you have other firewall solutions installed, you need to disable it temporarily or allow access to the port 5865.

4. (optional ) Test the settings in your browser. Change the proxy settings under the network options. For the proxy server I used 127.0.0.1 for port 5865, which is the default. It might take a few seconds to respond on first request.

5. Run the SDK Manager (Android SDK and AVD Manager)

6. Go to the “Settings” tab and enter the loop back address as the proxy server “127.0.0.1″ or your machine name.

7. Enter the port as 5865 and select/enable “Force https://… sources to be fetched using http://…”

8. Select “Installed packages” and click “Update All”. If it doesn’t kick off the update/install just restart the SDK Setup and it should start automatically after the reload.