Microsoft Defender Application Guard requires proxies to have a symbolic name, not just an IP address. IP-Literal proxy settings such as192.168.1.4:81can be annotated asitproxy:81or using a record such asP19216810010for a proxy with an IP address of192.168.100.10. This applies to Windows 10 Enterprise edition 1709 or higher. These would be for the proxy policies under Network Isolation in Group Policy or Intune.
If you start Fiddler and go toSettings > Network & Internet > Proxy, you will see under "Manual proxy setup" that:
The setting "Use a proxy server" has turned itself to On
Address has becomehttp=127.0.0.1:8888;https=127.0.0.1:8888
The problem here is that Application Guard does not accept such a URL, as it requires the proxy to be identified by name and not by IP address.
If you now try to change that URL tohttps=localhost:8888so as to give it a name, and then click the Save button, Fiddler will immediately turn Capture to Off, and will put up a large notice in yellow saying: "The system proxy was changed. Click to reenable capturing". And if you click the yellow header ... the proxy's URL in Settings returns tohttp=127.0.0.1:8888;https=127.0.0.1:8888(!).
As far as I can see, the situation is unsolvable: The two applications are mutually incompatible. This might perhaps be by design.
I have tried the new Fiddler and Charles proxy too, unfortunately they all set Windows proxy settings to 127.0.0.1, so only a debugger that uses named proxy would help here.