Found the issue - firewall.  Allowed TCP port 8000 for domain as well as public fixed the issue.
I'm a little confused what the SAN HQ Server credentials...  I have installed and configured a new SAN HQ server running 3.1.0 everything is up and running in parallel to our existing 3.0.1 server.  I can run the app and authenticate with my Domain Admin creds from the server no issues (ie: not degraded connection).  However I have installed the client only version on my local machine (on a different domain).  When I run the application I use the 'run as' and use my Domain admin creds on the correct domain.  However this doesn't seem to be able to successfully authenticate with the 3.1.0 server.  So I end up with the degraded connection.  error: "Failed to establish server communication. Please verify login credentials and try again.  Unable to establish connection with the server; verify the credentials supplied or contact the system administrator".  Apart from having the degraded connection everything seems to be talking / communicating. Also BTW - Works fine with the same client connecting to the old server running 3.0.1 - no issues same domain, same creds setup, etc.  Any ideas ?
SAN HQ Credentials for server