The Web Proxy Auto-Discovery (WPAD) feature in Microsoft Internet Explorer 6 and 7, when a primary DNS suffix with three or more components is configured, resolves an unqualified wpad hostname in a second-level domain outside this configured DNS domain, which allows remote WPAD servers to conduct man-in-the-middle (MITM) attacks.
http://www.vupen.com/english/advisories/2007/4064
http://www.securitytracker.com/id?1019033
http://www.securityfocus.com/bid/26686
http://www.microsoft.com/technet/security/advisory/945713.mspx