Check the log textbox if the following statement is present (might be accomodated by a 401 exception).
Receiving a service unavailable response on a website usually indicates, that the application pool of the site is not running.
To solve this issue, open your InternetInformation Management and verify all required app pools are started.
Before you can upgrade your CRM 4 to 2011, you will need to uninstall all 3rd party addons and check that all buttons have been deleted. After the migration you can then install the latest version of each addon. Should you have not done this, then it will be more complicated to get rid of the buttons and icons before you can install the CRM 2011 addons.
The problem occurs because MS CRM is using an HttpModule for multitenancy scenarios. This http module is called with an anonymous user account. This is why it fails when trying to request, i.e. the metadata webservice.