Can't Get Proxy Auto Configuration to Work

I'm trying to configure the auto configuration proxy script and can't seem to get IE to work with the Automatically Detect Settings option.

I have a web content proxy server running running on a machine (downstream - not upstream from Astaro) as I want Astar to handle all the firewall stuff and let this other box handle the more advanced content filtering. That proxy server sits on 192.168.3.1:8080.

When I manually configure IE to route my internet traffic through 192.168.3.1 port 8080, everything works perfectly. However, after clicking the checkbox in Astaro to "Enable Proxy Auto Configuration" on the Web Protection > Web Filtering > Advanced page and after clicking the checkbox to "Enable HTTP Proxy Auto Configuration" on the Network Services > DHCP page, I cannot get IE to load any websites when I only click the checkbox to "Automatically Detect Settings" without my manual proxy settings.

Does anyone know what I'm doing wrong?

Here is my PAC file that I have saved in Astaro:

function FindProxyForURL(url,host)
{ return "PROXY 192.168.3.1:8080; DIRECT"; }

Note: I should mention that I'm using the Sophos Beta, but I suspect this problem is due to my lack of knowledge rather than a bug - hense I posted here.