I found the solution after reading through the technical document on KB980436 and tested it successfully.
Apparently the IES doesn't interpret the new security Signaling Cipher Suite Value (SCSV) that is implemented within the patch. You can install the MS patch and communicate with the IES if you change a registry value that sets the SCSV back to the old type.
To make the change, open the registry editor on your PC and make your way to:
HKEY_LOCAL_MACHINE\System\CurrentControlSet\Control\SecurityProviders\SCHANNEL
add a DWORD called UseScsvForTls and set it to a value of 1.
For those of you who may not be comfortable mucking around int the registry you can copy the text below into a text editor and save it regmod.reg. Double click the file and it will do the modification for you.
Windows Registry Editor Version 5.00
[HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\SecurityProviders\SCHANNEL]
"UseScsvForTls"=dword:00000001
TekMason