FYI, the workaround for this is to add the basemaps from arcGIS online, this is broken right now. . .
In fact on the support home page it states, "At ArcGIS 10.1 when adding a basemap from the "Add Basemap" Dialog in ArcMap, the coordinate system of the data frame is changed to WGS 1984 Web Mercator (auxiliary sphere) and the map display is not refreshed. For more information and workaround on this bug please see Knowledge Base Article 40396."
so this must be related somehow to the AGX problem
