I have a number of machines, all of which have Visual Studio installed, where something (presumably visual studio) is overriding the proxy settings: setting up localhost and
Keep <vsts-proxy-installed-indicator>
in the exception list along with the other proxy and exception settings. This will solve the issue.
It looks like running mstests (e.g., from the "Test List Editor" tab triggers this! Can someone reproduce?
This happens because you've enabled "ASP.NET Client Proxy for IntelliTrace and Test Impact" in the Test Settings.
To disable - VS2010: Open the menu Test
> Edit Test Settings
> (select the current active test settings), select Data and Diagnostics
and disable the mentioned setting.
To disable - VS2013: Double click on the enabled* .testsettings
-file in the solutions explorer, select Data and Diagnostics
and disable the mentioned setting.
*) You'll find which one is enabled (if any) under TEST
> Test settings