WPAD is short for "Web Proxy Autodiscovery Protocol", and is a method for Windows machines to detect which machine to use as proxy for HTTP(S) traffic.
How to configure WPAD with Squid
It was a proposal expired by 1999, howerver the method is still being used in many places.
To verify;
http://www.lagado.com/proxy-test
Security concerns;
http://www.netresec.com/?page=Blog&month=2012-07&post=WPAD-Man-in-the-Middle
Reference;
http://kb.gfi.com/articles/SkyNet_Article/KBID003669
