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I will ask you some thing do you have transparent squid or just squid configured. because if you have the transparent squid then you will not need to put the proxy configuration in the client browser. and if its not transparent then let me know then we will go with all the process. and configure the followings.
DHCP Server
this is for the clients to get the IP address auotmaticlly.
Have you looked in your squid logs (the location can be found by searching for access_log, cache_log and cache_store_log in squid.conf) to see if there are any errors? Also, have you looked in the squid.conf file to see if any ACLs are set up that prevent access to yahoo.com?
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