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The problem is that I have to go through proxy here in college to make my internet work.

When I signed with my live id to switch to the Microsoft account in Windows 8, it recognized and validate my security questions but says it cannot connect to Microsoft Services. All other apps like mail, messenger, etc. work except for the Windows Store. The windows store what apps are available but when installed, queues it up for a pending download.

Is there a way to modify my proxy settings so that I can access both these features?

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Modern UI apps seem to have some trouble with proxys going back some time as you can see on a TechNet thread here.

That thread is huge, but the basic steps to try to fix this issue involve importing proxy settings from Internet Explorer to WinHTTP via netsh or a local machine or group policy change. The steps for this can be found here instead.

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Your second link is very useful. Thank you! –  Prabhpreet Oct 27 '12 at 5:30
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Since Windows 8 was just released today, the issue you are describing could be a result of congestion on Microsoft's servers.

Based on the description of your issue, it sounds like the store app does indeed work, but the apps are not yet downloading/updating.

I suggest giving it some time, and possibly a reboot, and see what happens.

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