When Windows Internet Properties -> Connections -> LAN Settings -> Automatic Configuration is set to "Automatically detect settings" how does Windows actually determine/discover what the settings are? Is it a network broadcast or some kind of targeted query to a server configured somewhere in the registry, or something else?
Its simple: Browsers (Firefox works the same) query GET http://wpad/wpad.dat.
If a web server named wpad is resolveable, it should serve wpad.dat, a script file analog to netscape PAC files. MIME type must also be "application/x-ns-proxy-autoconfig".