The subject behavior occurs on Windows 2000 clients that are running SP3, or SP4, because the client does NOT obtain proxy information from DHCP option 252.

To workaround this behavior, remove the DHCP class ID:

1. Open a CMD.EXE window.

2. Type Ipconfig /setclassid * and press Enter.

3. Shutdown and restart your Windows 2000 DHCP client computer.

NOTE: See How to enable Proxy Autodiscovery in Windows 2000.

NOTE: See How to configure DHCP class ID on a Windows 2000 DHCP client.