I came across following problem and found solution and would like to share.

While I was trying to record a script via workbench I got following error message. “Network Error (dns_unresolved_hostname)”

Called Microfocus and they said I do not have admin rights on my PC.

We analyzed by performing following steps:
1) Open Workbench then go to Session=>Record=>Start
2) When IE window opens then go to Tools=>Internet Options=>Connections=>LAN Settings
3) Proxy Server option is grayed-out. (This means I user does not have admin rights on his/her PC).

Here is the answer from Microfocus:

When using QALoad www middleware, the client should be proxyable which means it should point to QALoad proxy settings in order for QALoad to capture the traffic. If you are using IE, then the LAN settings should point to QALoad proxy. If the QALoad record option "automatic startup of IE" is selected, then QALoad will change the IE to point to QALoad proxy once you start the record process.

User must have admin rights on his/her PC.