Sharepoint 2007 rss viewer and proxy configuration

Hello Microsoft,

We have an issue using the rss viewer web part in Sharepoint 2007. 

Have a look at  http://blogs.msdn.com/adamhems/search.aspx?q=proxy&p=1 , which tells you how to use the following piece of web.config to configure Sharepoint to use a proxy server. 

<system.net>
      <defaultProxy>
         <proxy usesystemdefault = "false" proxyaddress="http://proxyservername" bypassonlocal="true" />
      </defaultProxy>
   </system.net> 

We received a message saying that the server required proxy authentication, irrespective of how we configured config files.

We also tried applying this hotfix for .NET framework 2.0 : KB 928563 http://support.microsoft.com/?kbid=928563 This did not solve the problem.

We use Squid.  We could only get it to work by poking a hole in the proxy server.