Ok, this is very puzzling, but I was helping a room that has this problem.
Their room is hosted using WinMX. XP machine can connect the bot just fine, using loopback, but the Windows 7 machine cannot. Metis keeps giving a Key Exchange error. I am able to connect to other rooms on Windows 7.
I am guessing that the coding for Metis is in need of an update, or a patch, to solve this issue. Vista and lower work just fine, it is just Windows 7.