On windows XP, default browser is Netscape 7, configuration of proxies is "use Browser" com.sun.deploy.net.proxy.NSPreferences is invoked to determine proxy.
(browser is set to manual, webcache2.east 8080)
with TraceLevel.Network set, output is:

network: Loading user-defined proxy configuration ...^M
network: Done.^M
network: Browser is C:\PROGRA~1\NETSCAPE\NETSCAPE\NETSCP.EXE -url "%1"^M
network: Browser is Netscape^M
network: NS version string: 7.1b1 (en)^M
network: version: 7.1^M
network: Loading proxy configuration from Netscape Navigator ...^M
network: Reading user preference file from C:\DOCUMENTS AND SETTINGS\AH22606\APPLICATION DATA\Mozilla\Profiles\default\j8jiv927.slt\prefs.js^M
network: network.proxy.http=webcache2.east^M
network: Proxy override: ^M
network: Done.^M
network: Proxy Configuration: No proxy^M

as you can see from output, finds host (webcache2.east) but not port,
and then returns with proxy: No proxy.

works fine with IE as default browser