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We're faced with a weird issue. We created a collection of Proxy Settings that we are applying to essentially everyone in the company. However we do have a subset of users that need to be excluded from this so we created security groups to use for exclusion. See image below.

Image of configuration (edit: image shows a forward slash, I can assure the syntax is correct in the filter, what I typed to conceal our naming scheme is incorrect and I haven't had time to fix it.)

As you can see, we have Item-Level Targeting enabled and we've selected one of the groups (in this case a test group) to direct it away, it is set to apply to users that are NOT a member of the security group. This doesn't work.

We've also tried to apply this to specific users, and to run this in the logged-on user's security context. We've rebooted computers multiple times and as you can see on the "ProxyServer" object, "Filtered by ancestor:" is set to yes.

Filtering does work on each specific registry object, when we apply the exact same filter on "ProxyServer", the filtering works approprietly. I've looked extensively online however have not been able to find any issues like this. We will be using filtering on each object for now, however, that is going to be cumbersome to manage. Does anyone know what's causing this, is there some other setting we need to enable?

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Your picture shows forward slash, the syntax for domain{}group is always backslash

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