Thought I'd just post the solution to activation troubles: Internet Explorer must be set as your default browser during activation! If something else, like Firefox (version 3.5.4 in my case), is your default browser, activation simply won't work and result in "CONNECTION_ERROR"!
@Telltale support: This hint really should be your standard reply to all activation problem posts and it should definitely go to the FAQ, if it isn't yet there. (I didn't see it, at least.) And, BTW, I don't think it's good programming practice to require IE for activation. At least the program should call IE directly, instead of referring to the default browser, if it relies on IE-only featuers.
Bye, hope I could help some folks,