Get an error when trying to add iCloud account to System Preferences in 10.7.3

My system:

Macbook Air (late-2010) running OS X Lion 10.7.3

My issue:

I upgraded my MobileMe @mac.com account to iCloud but now am unable to add my account in MobileMe via System Preferences.

I get this error "Unable to sign in because of a problem communicating with iCloud".

Additionally, when I tried adding my @mac.com account into Mail.app on my Macbook Air, the incoming mail server text disappears (and greyed out so I can't type in it), and the Outgoing Mail server (smtp.mail.me.com) says it's offline.

I have searched for days for a solution via Google and Bing and Apple Support Forum but to no avail.

I made sure that my @mac.com account is my Apple ID and default email address. I am able to log in just fine at iCloud.com but not MobileMe within System Preferences. I am also able to sync my @mac.com email, calendar, and contacts on my iPhone 4S just fine. I see that this is an ongoing issue with people upgrading from MobileMe to iCloud but none of the solutions I found have worked for me.

Has anyone found a solution for this error?? Any help would be appreciated.

Thanks!