Error:Could not start session in appium desktop

I am getting error saying “Could not start session”

Appium version (or git revision) that exhibits the issue: 1.9.0
Desktop OS/version used to run Appium: Windows 10
Mobile platform/version under test: 8.0.0
Real device or emulator/simulator: Real device
Have added the following capabilities as per below image

Squid proxy server is running in the background with port 3128

When I try to access http://localhost:4723/wd/hub/status, I am getting below response -

but when I start session in appium desktop, it says Error:Could not start session

Can you please let me know why this is happening.