As the comments you've received allude to, I think the repository you're cloning contain sub-repositories.
The error message is saying that Mercurial can't find the IP address for something (i.e. a DNS lookup has failed), but you've obviously managed to connect to the server with the initial repository on it. Sub-repositories are cloned during the update process of the parent. The fact that you're getting the error just after the updating to branch trunk
message leads to the conclusion that this is your problem.
Look at the contents of .hgsub
in the original repository. If it has anything in it, it will have the URLs of any sub-repositories. I suspect these URLs have been written in a way that means they aren't accessible from the machine you're trying to clone to. If possible, fix these to make them general enough to work anywhere.
That error message should really say what it was looking up and why.