I guess we should start with the definition of Proxy. It means "to act on behalf of another," and a proxy server acts on behalf of the user. All requests from clients to the Internet go to the proxy server first.
The proxy evaluates the request, and if allowed, re-establishes it on the outbound side to the Internet. Likewise, responses from the Internet go to the proxy server to be evaluated. The proxy then relays the message to the client. Both client and server think they are communicating with one another, but, in fact, are dealing only with the proxy.
This is the same for Dial Up Proxies and Local Area Networking Proxies. I use a little application called <a href="http://www.winproxy.net/">WinProxy. It is available from here: </a>
One of the most popular proxy servers available for Windows based systems is WinProxy. One of the reasons for its popularity is that no software has to be installed on the client systems. This is possible since WinProxy is a transparent proxy server meaning that it also provides NAT (Network Address Translation). Due to this the client system is virtually unaware of the existence of the proxy server. Apart from the usual caching and security features it also supports important protocols like HTTP, Real Audio/Video, Mail, FTP, NNTP News, Telnet, Socks, Secure Sockets, DNS, IMAP 4, etc.
The WinProxy Server may be installed and configured as follows as follows:
1. Install the TCP/IP protocol on all systems connected to the network.
2. Run the Install Wizard. The first screen is the product registration screen which require you to enter the product key.
3. The next two screens require information about your Internet connection. Select the type of connection and the name of your connection.
4. Enter the username and password of the Internet connection to be used.
5. WinProxy then configures the internal and external IP addresses. It automatically assigns a unique address to each device on the LAN as internal addresses. The IP address assigned to the modem/router by your ISP is taken as the external address.
6. WinProxy then prompts you to disconnect from the Internet if you are already connected.
7. In the final step WinProxy works through all the steps and verifies that all operations have been performed properly.