So did this issue just start with 12.1? Did it just start and was 12.1 working prior?
SEP connects to liveupdate.symantecliveupdate.com, liveupdate.symantec.com, and akamai.net. The IPs for these are not static so without DNS, it can't resolve these. I don't think there is a specific doc on it
Per this doc:
http://www.symantec.com/docs/TECH139451
Note: Symantec does not supply IP addresses for Symantec LiveUpdate servers. The server addresses are not static and, consequently, routing directly to an IP address may cause LiveUpdate to fail.