First, update to Mac OS X Server v10.6.3 or later. For more information, see Mac OS X Server v10.6: Software Update Service may not reach Apple through proxy server
After installing the Mac OS X Server v10.6.3 Update or later, you will need to define your Web Proxy (HTTP) in the Network preferences instead of using the PAC file. In order to specify the Web Proxy (HTTP) settings and disable the Automatic Proxy Configuration, follow the steps below:
1. From the Apple menu, choose System Preferences.
2. From the View menu, choose Network.
3. Select the primary network interface in the list of Network Interfaces.
4. Click the Advanced... button in the Network Interface settings.
5. Click the Proxies tab of the Advanced Interface settings.
6. Select Web Proxy (HTTP) from the list of protocols.
7. Enter the IP address and the port number of the Web Proxy service in the required fields.
8. Enable the Web Proxy (HTTP) by checking the Web Proxy (HTTP) checkbox
9. Disable the Automatic Proxy Configuration by unchecking the Automatic Proxy Configuration checkbox.
10. Click OK.
11. Click Apply.
12. Ensure that the web is browsable through the Web Proxy (HTTP) settings by opening Safari and loading a website, such as www.apple.com.
Important: A separate issue related to using Web Proxy (HTTP) servers that require authentication is described in Mac OS X Server v10.4 or later: Requirements for Software Update Service.