Implementing/Testing Proxy.pac file

[JayK]

I have having very hard time making my workstation read the Proxy.pac
file for Internet Explorer 6.

I have specified it in Tools > Internet Options > Connections > LAN
Settings, in Address under the checkbox 'Use automatic configuration
script' in either of these formats
file://c:/temp/proxy.pac
or
http://localhost/proxy.pac (Local website is running and I can read
the proxy.pac file this way.)

The actual proxy.pac file I have created has many conditions for when
not to use Proxy server, however, even the simple most file like the
following is not being read:

*****
function FindProxyForURL(url, host)
{
return "PROXY 192.168.10.242:8080";
}
*****

I am doing NETSTAT -A to see if PC is going to the IP of the proxy
server.

How can this be troubleshooted? There are no error messages. I will
really appreciate some pointers. Thanks.

Jay