I had a problem where I wanted to configure WPAD DNS lookups for a company however when I added the WPAD record to my primary dns zone I was unable to resolve it on Windows Server 2003.
I found out that the any host A records containing "WPAD" or "ISATAP" are blacklisted by default on Windows Server 2003 DNS. To remove the blacklist on every DNS server in your organisation navigate to the following registry key:
Remove where it says WPAD from this registry key and then restart the DNS service. Repeat this for every DNS server in your organisation.