Firefox and Proxy Server

I don't know if this is the right place for this or not, but I figured I could get some help around here.

Here's the story....I have this web application and a lot of people use it, some of whom are way out in California. One thing that we have noticed is happening, is that when FireFox is set up manually to connect to a proxy, and you try and log into the application, it gives the application the proxy address instead of the IP address. I have tried using the exceptions option in FireFox but that doesn't work.

I don't really know much about Proxys or networking in general for that matter, does anyone know any reason why this could be happening? Do I need to give more information? Let me know how I can help out some more because this is really bugging me.

Does it happen with IE or with firefox's ntlm authentication turned on?

It did happen in IE because it was set up manually to use a proxy just like FireFox but in IE there is a box that you can check that says bypass proxy for local addresses. Once you click that it works fine in IE. How do you turn on ntlm authentication?

o ok I see what it is. I do not want to set up ntlm for this web app. Is there a fix for this proxy server problem?