Autodetecting proxy settings is a two-step process:
1) Attempt to get a DHCP wpad URL (dhcp option 252)
2) Attempt to resolve the well-known host name 'wpad' for the local dns domain
If there is no working DHCP server on the local network, step 1 will time out after about 15-20 seconds
If step 1 fails and there is no working DNS server on the local network either, the browser will assume there is no proxy. In this case you might want to fix the DNS settings and/or local domain name, but that's a whole different story.