I had the same problem after upgrading to version 1.1, but when I looked at the Windows Azure logs in Azure VM, I noticed the following exception:
An unhandled exception occurred. Type: System.ArgumentException Process ID: 2340 Process Name: DiagnosticsAgent Thread ID: 1 AppDomain Unhandled Exception for role Backend_IN_0 Exception: Endpoint http:
So, I changed the Diagnostics connection string to use https instead of http and voilá, which solved my problem.
Hope this works for you, I pulled my hair out for two days.
Axel magagnini
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