Proxy Autoconfiguration and Internet Explorer Zones

["Elazar Broad" <elazar () hushmail com>]

I got an interesting issue with Internet Explorer(6 and 7 on 
Windows XP SP2) and proxy auto-configuration files. I was wondering 
if anyone has a similar setup and is experiencing behavior like 
this. My setup is as follows. Client machines are configured to use 
a PAC file via group policy. The pac file specifies a direct 
connection(via the DIRECT instruction) for a specific sub-net. The 
pac file is retrieved from a web server on the internal network. 
Now, when Internet Explorer connects to an external site, it 
normally is in the Internet Zone. Now, in this scenario, any 
external sites are ending up in the Local Intranet zone even though 
Internet Explorer is connecting directly to the external site(I 
have verified this through a packet capture). Logically, the DIRECT 
instruction should place any external sites in the Internet Zone, 
not Local Intranet, that is if Internet Explorer can properly 
differentiate what is on the local network or not. I guess if it 
can't then this whole issue is moot.

Elazar

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