If the defaultProxy element is empty, the proxy settings from Internet Explorer will be used. This behavior is different from version 1.1 of the .NET Framework.
An exception is thrown if the module element specifies a non-public type, the type is not deriving from the IWebProxy class, an exception from the default constructor of this object occurred, or an exception occurred while retrieving the system-specified default proxy. The InnerException property on the exception should have more information about the root cause of the error.
Configuration Files
This element can be used in the application configuration file or the machine configuration file (Machine.config).