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Bypass proxy and local intranet site exception not working

Hi,

We have a locally hosted website in our organisation which loads when the proxy option in IE is unticked. When the proxy is ticked it does not. Instead of the expected password prompt you see the error:

Under Construction
The site you are trying to view does not currently have a default page. It may be in the process of being upgraded and configured.
Please try this site again later. If you still experience the problem, try contacting the Web site administrator.

Adding the site to the local intranet zone and ticking the bypass local addresses option, I would have thought, would have had the same effect as unticking the proxy, but this does not seem to be the case.

The site also looks to being recognised as part of the local intranet zone as the status bar of IE displays this.

I get the same result whether configuring the local intranet zone via group policy or locally on the machine.

Environment:
Windows XP SP3
IE8

Windows Server 2003 domain

Any help is appreciated,

Thanks,

David



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