That is *definetly* the problem, after extensive testing, and now I have the auth_proxy setup at home to prove it. Ivan, I've setup squid with authentication, and you can use it to test (in case you haven't had time in the last couple days to do it yourself). Email me privately and I'll get you the hostname/logon information. Everyone else: if you are currently in a situation where you have to use an authenticating proxy, do not upgrade to the latest kde packages. You *will* get frustrated as hell :-)
David