I have fiddler installed on a Windows 7 32 bit machine.
When I start fiddler it correctly sets the proxy settings of IE9 browser (Firefox and chrome browsers too). However the captured traffic is not showing in the web sessions window.
I know it is acting as a proxy on port 8888 because if I go to IE proxy setting and manually change it to 8887, web pages no longer load. changing it back to 8888 and the pages loads no problem.
Disabling 'capture traffic' on fiddler then correctly disables the browser proxy setting again.
So it appears to be correctly configuring itself, only thing is that I cant see the traffic, I also cannot trap requests|responses.