I face the same problem when upgrading from karmic to lucid. The change
proposed in comment #5 gets me going.
It needs a small modification though - the finally: clause is wrong:
File "/usr/lib/python2.6/dist-packages/UpdateManager/Core/utils.py", line
113, in url_downloadable
resp.close()
--
version upgrade via update-manager or do-release-upgrade does not work with
proxy authentication
https://bugs.launchpad.net/bugs/479391
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