Prabhadevi ,
In the modeler home page , You should see the repository (Started).
After this , You need to open up the repository port accessible by external world. This is undocumented , we hit the same issue. once opening up the port the issue is resolved. The Key the Modeler client accessed this port directly.
If Modeler client & IS are running in the same machine , the problem should be different.
-Ravi