Windows Server 2008 introduces a DNS block feature that may affect the ISA Server automatic discovery mechanism when implementing WPAD using a Windows Server 2008 DNS Server.
The block feature provides a global query block list to reduce vulnerability associated with dynamic DNS updates. Dynamic update makes it possible for DNS client computers to register and dynamically update their resource records with a DNS server whenever a client changes its network address or host name. This reduces the need for manual administration of zone records, especially for clients that frequently move or change locations and use DHCP to obtain an IP address. This convenience comes at a cost, however, because an authorized client can register any unused host name, even a host name that might have special significance for certain applications. This can allow a malicious user to "hijack" a special name and divert certain types of network traffic to that user's computer. WPAD is a commonly deployed protocol vulnerable to this type of hijacking, and by default WPAD look up is disabled by the blocking mechanism.
If you want to use WPAD with a Windows Server 2008 DNS, note the following behavior:
To update the block list, use the dnscmd command-line tool. Open a command line prompt, and do the following:
For more information about the DNS block list feature and dnscmd commands, download the article "DNS Server Global Query Block List" from TechNet at http://technet.microsoft.com/en-us/network/bb629410.aspx.
Rayne Wiselman
ISA Server User Education Team
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Esta es una de las típicas preguntas que siempre nos hacemos los IT Pros, los Developers y los Arquitectos. 
I just had to add a comment here, hoping to help people googling this subject. With the DNS blacklist enabled (blocking WPAD) you'll get a Windows Event ID 7600. At this point, if you search Technet, Support, etc you'll find nothing useful regarding Event ID 7600 and Windows 2008 DNS blocking the query.
Thank you Rayne for publishing this here.
Last year Rayne Wiselman wrote in the ISABlog about the Windows Server 2008 DNS Block Feature and how
Vorige week was ik bij een klant die me vroeg om even te helpen bij het opzetten van WPAD records in
dnscmd /config /globalqueryblocklist
gives this error?!?:
DNS Server failed to reset registry property.
Status = 5 (0x00000005)
Command failed: ERROR_ACCESS_DENIED 5 0x5
Try running the command prompt as Admin Richard :)
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