Fix proxy credentials not working from environment variables during agent configuration

src/Agent.Listener/Configuration/ConfigurationManager.cs

@@ -1032,6 +1032,14 @@ private bool SetupVstsProxySetting(IVstsAgentWebProxy vstsProxy, CommandSettings
                 vstsProxy.SetupProxy(proxyUrl, proxyUserName, proxyPassword);
                 saveProxySetting = true;
             }
+            else if (!string.IsNullOrEmpty(vstsProxy.ProxyAddress))
+            {
+                // If no command line proxy args provided but proxy is configured via environment variables or config files,
+                // ensure the proxy settings are properly applied during configuration
+                Trace.Info("Applying proxy settings from environment variables or config files during configuration.");
+                vstsProxy.SetupProxy(vstsProxy.ProxyAddress, vstsProxy.ProxyUsername, vstsProxy.ProxyPassword);
+                saveProxySetting = true;
+            }
 
             return saveProxySetting;
         }

src/Test/L0/Listener/Configuration/ConfigurationManagerL0.cs

@@ -617,6 +617,105 @@ private List<EnvironmentInstance> GetEnvironments(string projectName, Guid proje
         }
 
         // Init the Agent Config Provider
+        [Fact]
+        [Trait("Level", "L0")]
+        [Trait("Category", "ConfigurationManagement")]
+        public void SetupVstsProxySetting_ShouldApplyEnvironmentVariableProxySettings()
+        {
+            using (TestHostContext tc = CreateTestContext())
+            {
+                // Arrange
+                var configManager = new ConfigurationManager();
+                configManager.Initialize(tc);
+
+                var command = new CommandSettings(tc, new string[0]);
+
+                // Mock proxy settings from environment variables
+                _vstsAgentWebProxy.Setup(x => x.ProxyAddress).Returns("http://proxy.company.com:8080");
+                _vstsAgentWebProxy.Setup(x => x.ProxyUsername).Returns("proxyuser");
+                _vstsAgentWebProxy.Setup(x => x.ProxyPassword).Returns("proxypass");
+
+                // Act - Use reflection to call the private SetupVstsProxySetting method
+                var setupMethod = typeof(ConfigurationManager).GetMethod("SetupVstsProxySetting", 
+                    System.Reflection.BindingFlags.NonPublic | System.Reflection.BindingFlags.Instance);
+                bool result = (bool)setupMethod.Invoke(configManager, new object[] { _vstsAgentWebProxy.Object, command });
+
+                // Assert
+                Assert.True(result, "SetupVstsProxySetting should return true when proxy is configured from environment variables");
+
+                // Verify that SetupProxy was called with the environment variable values
+                _vstsAgentWebProxy.Verify(x => x.SetupProxy("http://proxy.company.com:8080", "proxyuser", "proxypass"), Times.Once);
+            }
+        }
+
+        [Fact]
+        [Trait("Level", "L0")]
+        [Trait("Category", "ConfigurationManagement")]
+        public void SetupVstsProxySetting_ShouldReturnFalseWhenNoProxyConfigured()
+        {
+            using (TestHostContext tc = CreateTestContext())
+            {
+                // Arrange
+                var configManager = new ConfigurationManager();
+                configManager.Initialize(tc);
+
+                var command = new CommandSettings(tc, new string[0]);
+
+                // Mock no proxy settings
+                _vstsAgentWebProxy.Setup(x => x.ProxyAddress).Returns((string)null);
+
+                // Act - Use reflection to call the private SetupVstsProxySetting method
+                var setupMethod = typeof(ConfigurationManager).GetMethod("SetupVstsProxySetting", 
+                    System.Reflection.BindingFlags.NonPublic | System.Reflection.BindingFlags.Instance);
+                bool result = (bool)setupMethod.Invoke(configManager, new object[] { _vstsAgentWebProxy.Object, command });
+
+                // Assert
+                Assert.False(result, "SetupVstsProxySetting should return false when no proxy is configured");
+
+                // Verify that SetupProxy was not called
+                _vstsAgentWebProxy.Verify(x => x.SetupProxy(It.IsAny<string>(), It.IsAny<string>(), It.IsAny<string>()), Times.Never);
+            }
+        }
+
+        [Fact]
+        [Trait("Level", "L0")]
+        [Trait("Category", "ConfigurationManagement")]
+        public void SetupVstsProxySetting_ShouldPreferCommandLineOverEnvironmentVariables()
+        {
+            using (TestHostContext tc = CreateTestContext())
+            {
+                // Arrange
+                var configManager = new ConfigurationManager();
+                configManager.Initialize(tc);
+
+                // Mock command line arguments to include proxy settings
+                var args = new string[] 
+                {
+                    "--proxyurl", "http://cmdline-proxy:8080",
+                    "--proxyusername", "cmduser", 
+                    "--proxypassword", "cmdpass"
+                };
+                var command = new CommandSettings(tc, args);
+
+                // Mock proxy settings from environment variables (should be ignored)
+                _vstsAgentWebProxy.Setup(x => x.ProxyAddress).Returns("http://env-proxy:8080");
+                _vstsAgentWebProxy.Setup(x => x.ProxyUsername).Returns("envuser");
+                _vstsAgentWebProxy.Setup(x => x.ProxyPassword).Returns("envpass");
+
+                // Act - Use reflection to call the private SetupVstsProxySetting method
+                var setupMethod = typeof(ConfigurationManager).GetMethod("SetupVstsProxySetting", 
+                    System.Reflection.BindingFlags.NonPublic | System.Reflection.BindingFlags.Instance);
+                bool result = (bool)setupMethod.Invoke(configManager, new object[] { _vstsAgentWebProxy.Object, command });
+
+                // Assert
+                Assert.True(result, "SetupVstsProxySetting should return true when command line proxy is provided");
+
+                // Verify that SetupProxy was called with command line values, not environment values
+                _vstsAgentWebProxy.Verify(x => x.SetupProxy("http://cmdline-proxy:8080", "cmduser", "cmdpass"), Times.Once);
+                _vstsAgentWebProxy.Verify(x => x.SetupProxy("http://env-proxy:8080", It.IsAny<string>(), It.IsAny<string>()), Times.Never);
+            }
+        }
+
         private List<IConfigurationProvider> GetConfigurationProviderList(TestHostContext tc)
         {
             IConfigurationProvider buildReleasesAgentConfigProvider = new BuildReleasesAgentConfigProvider();