When users point Internet Explorer 11 to a local proxy PAC file, the browser keeps attempting to load web pages. Users cannot access the internet.
The PAC file works correctly in Internet Explorer 8 and 10, and users can access the PAC file from their computers.

This is known issue with Internet Explorer 11. The "local" PAC file (directory starting with "file://") is not supported.

For Internet Explorer 11, the WinINET team has disabled WinINET’s support for file:// based scripts to promote interoperability across network stacks.
You can put your PAC file on a HTTP/HTTPS-accessible server and use that link for Internet Explorer 11 proxy settings.