Please restart your machine and try again. Also check whether Firewall or any Anti-virus software is blocking ADE to access activation server.
Thanks for the reply
I did restart but the problem persisted. Got it sorted however after uninstalling version 4.0 and turning off the firewall and re-installing DE (chose version 3.0 this time though just because I felt retrograding may increase chances of successful installation- fewer bugs you know). The rest of it just followed.