I have spent considerable time on this. Finally this worked for me.
Note: For all the devs around, Kies does not work with USB Debugging enabled.
If you check and find that in your case its already disabled, do not be alarmed. In some cases the issue remains even when its disabled. Try this.
1. Unplug the USB cable from the Galaxy S3
2. On the Phone go to "Settings" > "Developer Options" > Enable "USB Debugging"
3. Connect the USB cable from the Galaxy S3 to the PC
4. The PC will install some drivers, wait for it.
5. When the drivers are installed, unplug the USB cable from the Galaxy S3
6. Go to "Settings" > "Developer options" > Disable "USB Debugging"
7. Connect the USB cable from the PC to the Galaxy S3
8. Run Kies.
Let me know how it goes. You can also reply back on Facebook - Rooting for Android page