I came up with an alternative to using the 'Computer Configuration'.
Under the User Configuration, I set the Proxy sever to 127.0.0.1, and then setup an exceptions list for our intranet. I set the Home page and listed the other intranet pages in the Favorites list. I also removed access to manually change the Proxy settings. I then assigned this to the same OU's as our 'good' Proxy GPO. It had to be applied after the 'good' GPO to work right (smaller # in list). Then read access to the GPO was given to the group "No Internet".
Proxy setting:
User Configuration/ Windows Settings/ Internet Explorer Maintenance/ Connection/ Proxy Settings
Note for exceptions list: be sure to us the wild card “*†to complete the addresses (i.e. http://*.example.com, or 10.1.10.*). That was part of my troubles.
Disable connection settings:
User Configuration/ Administrative Templates/ Disable changing connections settings


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