I got it running with the integrated web service. I did not encounter the error you are seeing but did have some difficulty which may be related. That is my service binaries were initially in c:\proget. When I moved them to c:\proget\service it was then able to find the web app at c:\proget\WebApp. If you have not done so already try moving your service binaries to c:\proget\service.
I’m using the Integrated Web Service. My folders were already set up that way, where it’s split into a ‘Service’ and a ‘WebApp’ folder. I also have it binded with the core/sqlserver package. Do you have it binded as well?
no. i just wanted to do something super simple to get it calling the binary
Hmm…okay. I’ll keep digging at the issue and update once I find a solution! Thanks a lot for the help so far! 
Hi @aumkar - how is this issue going for you?
I ended up working around it by dumping the manual installer and just running with the installer version in silent mode. Letting the installer handle it seems to have worked around any permissions issues with Proget. Works perfect now with minimal modification.