Kpackagekit won't connect to localhost

Binary package hint: kpackagekit

Fairly new installation of Kubuntu 9.10 with all patches applied. I merged my /home from 9.04 into this.
lsb_release -rd
Description: Ubuntu 9.10
Release: 9.10
===
apt-cache policy kpackagekit
kpackagekit:
  Installed: 0.4.2-0ubuntu3
  Candidate: 0.4.2-0ubuntu3
  Version table:
 *** 0.4.2-0ubuntu3 0
        500 http://us.archive.ubuntu.com karmic/main Packages
        100 /var/lib/dpkg/status
===
When I try to download packages with Kpackagekit, it refuses to install. The error message is as follows:

The package download failed:
Failed to fetch http://us.archive.ubuntu.com/ubuntu/pool/universe/m/mc/mc_4.6.2-2ubuntu1_i386.deb Could not connect to localhost:1080 (127.0.0.1). - connect (111: Connection refused) [IP: 127.0.0.1 1080]

If I run apt-get to install the same package, it works correctly.

ProblemType: Bug
Architecture: i386
Date: Mon Feb 8 22:36:45 2010
DistroRelease: Ubuntu 9.10
InstallationMedia: Kubuntu 9.10 "Karmic Koala" - Release i386 (20091028.5)
Package: kpackagekit 0.4.2-0ubuntu3
ProcEnviron:
 LANGUAGE=
 LANG=en_US.UTF-8
 SHELL=/bin/bash
ProcVersionSignature: Ubuntu 2.6.31-19.56-generic
SourcePackage: kpackagekit
Uname: Linux 2.6.31-19-generic i686