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The error messages pops up on Windows 10 version 1703. Fiddler installs and runs with not issues on Windows 10 version 1607.
This is most likely a bug in either Windows, or a configuration problem in your environment. Does it still happen if you right-click Fiddler and Run As Administrator? Is there any text on Fiddler's LOG tab? If you try to change the system proxy settings manually to 127.0.0.1 port 8888 (In Fiddler, click Tools > Wininet Options > Connections > LAN Settings) do the changes "stick" after you hit OK and then reopen LAN Settings)?
The solution is in the following link, but you have to reboot after applying it to make is active.
A copy of the text, if the link will vanish one day:
Type Windows+R and enter services.msc is the textbox.
Then look for WinHTTP Web Proxy Auto-Discovery Service, right click and select Properties.
Change the startup type to Automatic and then click on Start.
If for any reason you can’t change the startup type cause disabled, open regedit, go to HKLM\SYSTEM\CurrentControlSet\services\WinHttpAutoProxySvc and change start value to 2.
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