Setting "take over settings from Interenet Explorer" does not work. I believe the proxy IS set to the default proxy in the system, but authentication does not happen automatically as it would happen in IE.
System.Web and the like let you say you want to use the same proxy but in fact the don't automatically take over your credentials for authenticating you... IE "cheats" in this I believe :-)
So I am not sure about the details, but in case that cannot work and you have to specifically set a proxy for the application, then it should AT LEAST be explained/written in the GUI, I believe.
2008-06-29 09:06:42,472 [4720] ERROR NewsComponents.Feed.GoogleReaderFeedSource [(null)] - Request of 'https://www.google.com/accounts/ClientLogin?continue=http://www.google.com&service=reader&source=RssBandit&Email=muscetta@gmail.com&Passwd=thisisnotmyrealpassword' gets unexpected HTTP response: ProxyAuthenticationRequired
Exception: System.Net.WebException
Message: Request of 'https://www.google.com/accounts/ClientLogin?continue=http://www.google.com&service=reader&source=RssBandit&Email=muscetta@gmail.com&Passwd=thisisnotmyrealpassword' gets unexpected HTTP response: ProxyAuthenticationRequired
Source: NewsComponents
at NewsComponents.Net.AsyncWebRequest.GetSyncResponseStream(HttpMethod method, String address, String& newAddress, ICredentials credentials, String userAgent, IWebProxy proxy, DateTime& ifModifiedSince, String& eTag, Int32 timeout, RequestResult& responseResult, Cookie cookie, String body, WebHeaderCollection additonalHeaders)
at NewsComponents.Net.AsyncWebRequest.GetSyncResponseStream(String address, ICredentials credentials, String userAgent, IWebProxy proxy, Int32 timeout)
at NewsComponents.Net.AsyncWebRequest.GetSyncResponseStream(String address, ICredentials credentials, IWebProxy proxy)
at NewsComponents.Feed.GoogleReaderFeedSource.AuthenticateUser()
at NewsComponents.Feed.GoogleReaderFeedSource.LoadFeedlistFromGoogleReader()
at NewsComponents.Feed.GoogleReaderFeedSource.UpdateFeedList()
at NewsComponents.Feed.GoogleReaderFeedSource.RefreshFeeds(Boolean force_download)
Logged In: YES
user_id=24549
Originator: NO
It would be useful to know your proxy settings or details of how your proxy connection is set up.
Logged In: YES
user_id=714452
Originator: NO
fixed in SVN trunk (v1.7.0.3). User are now able to specify credentials for IE proxy too.