GPO Proxy - MACHINE

Hi guys,

I am having issues with the group policy / proxy setting. I am trying to setup a proxy settings for the machine so I created the following ADM which works perfect because I see it affect the registry exactly were I want it.

CLASS MACHINE

 CATEGORY "Proxy Settings Machine Base" 

   POLICY "Proxy Enable"
    KEYNAME "SOFTWARE\WOW6432Node\Microsoft\Windows\CurrentVersion\Internet Settings"
    EXPLAIN !!ExplainProxyEnable
    VALUENAME "ProxyEnable"
    VALUEON NUMERIC 1
    VALUEOFF NUMERIC 0  
   END POLICY

   POLICY "Proxy Override"
    KEYNAME "SOFTWARE\WOW6432Node\Microsoft\Windows\CurrentVersion\Internet Settings"
    EXPLAIN !!ExplainProxyOverride
    PART !!ServerOverride EDITTEXT
     VALUENAME "ProxyOverride"
     DEFAULT "10.*"
    END PART
   END POLICY

   POLICY "Proxy Server"
    KEYNAME "SOFTWARE\WOW6432Node\Microsoft\Windows\CurrentVersion\Internet Settings"
    EXPLAIN !!ExplainProxyServer
    PART !!ProxyServer EDITTEXT
     VALUENAME "ProxyServer"
     DEFAULT "http=169.0.0.0:10;https=169.0.0.0:10;ftp=169.0.0.0:10;socks=169.0.0.0:10"
    END PART
   END POLICY

 END CATEGORY

I login with a user and sure enough everything is working to plan to problem occurs on my SCCM agent (local user) he constantly tries to connect to my bogus proxy.

I am going crazy here, I really have no idea whats going on.

George S.