I have recently encountered all kinds of problem after my W7 workstation was patched with MS security updates and java 8 (java is nasty, isn't it?) regarding to NetApp SystemManager 3.1.2 (SM312).
First, the error is "500 Connection Refused"", then "HTTP XML Authentication failed from x.x.x.x (DFM server) on Netapp controller", and last the KS file corruption.
I tried to remove java 8, then remove and re-install Java (jre-7u65) and SM312; did not work.
Of course, you have to install jre-7u65 and SM.
Next, recovere the SM.config file from C:\Users\myusername\NetApp\SystemManager using SMBackup.config, simply deleted the SM.config file then recreate the file using backup (you know how to do this, don't yuo?); deleted the KS file. This restored my previous connections to my filers, great, one step closer.
Next, putty to the filers (controllers) and run this command: "options tls.enable on", bingo, my SM back to work.
Thanks, guys. Good Luck.