Freeware local proxy engine for Windows? [closed]

Guess I'm a bit late to the party, but you should check out cntlm. I believe it satisfies almost all your criteria.

Can't believe I forgot Squid: free, open source, runs on windows and supports NTLM authentication. There is a native windows port of squid available in binary.

Privoxy will also work and is free, but it doesn't support NTLM authentication.

In the past when I needed a proxy to allow a screenscraping script to talk to corporate servers that require NTLM authentication, I downloaded NTLM Authorization Proxy Server and it worked very well. You can get version 0.9.9.6 here.

I don't believe that it runs in the system tray, however you could try using SRVANY to change it into a service.

The only other way that I know which might work is curl but I'm not sure if this can just function as a general proxy. Go to the curl man page and scroll down to --proxy-ntlm