Microsoft is working on a fix for an eight-year-old flaw in Windows that lets hackers exploit a Web proxy autoconfiguration protocol and take over groups of machines via a single attack. Microsoft has yet to release the update it has been working on since last week that addresses the vulnerability in the Web Proxy Autodiscovery Protocol (WPAD) in Windows. 

The flaw was first discovered in 1999, and some experts say it has never been adequately patched.

The flaw affects all versions of Windows including Vista, but does not affect computers in the United States. Microsoft reportedly patched the flaw eight years ago to protect computers that use the “.com” domain as part of their corporate identity. The fix, however, does not work for computers that use domain country codes, such as .nz (New Zealand) or .uk (United Kingdom).

WPAD is a method used by Web browsers to locate a proxy configuration file called wpad.dat that is used to configure a Web browser’s proxy settings. Part of the flaw lets the search for the configuration file leave the safety of the corporate network, thus opening an avenue for a hacker to hijack the request and deliver a configuration file to the browser that could then be then exploited to intercept and modify the user’s Web traffic.

The Windows WPAD feature was designed so administrators would not have to configure browser proxy settings on each desktop manually. All the automated WPAD configuration work takes place out of view of the user.

Last week, Beau Butler, who also goes by the name Oddy and the title “ethical hacker,” presented his rediscovery of the WPAD flaw at the annual Kiwicon security conference at Victoria University of Wellington in New Zealand. Butler told conference attendees and Australia’s The Age Web site that he found 160,000 computers in New Zealand using the .nz domain that were vulnerable to the WPAD flaw. The Age said Microsoft asked it not to publish the details over fears they could be used by cybercriminals to seize control of workstations. Microsoft confirmed it was a serious issue, The Age said.

Some details about the vulnerability, however, are available by doing simple queries on Microsoft’s own Live Search Web site. Additionally, Microsoft publishes Knowledge Base articles on its Web site describing how WPAD works.