Hi Adeel,
I have followed all the steps mentioned in each of the blogs. But unfortunately, i'm still getting above mentioned error. Authentication from my local machine while connecting to CRM online is not working. I'm giving CRM onlline user id and password. Tried with windows live id also but no luck. My doubt is on AuthenticateLiveIdInternal in the above error. Not sure whether CRM is trying to authenticate against windows id or something they have hard coded. I read this issue and lot of other guys are facing same issue. But did not find any solution.