I'm having the exact same issue. If i find anything i will let you know
When you run:
/usr/sbin/networksetup -listallnetworkservices
Is the network service listed as "Airport" or as something else?
You might have a look at this thread, too.
https://jamfnation.jamfsoftware.com/discussion.html?id=6562
Should give some helpful hints.
using
/usr/sbin/networksetup -setwebproxy "Airport" "proxy.server.com" "123" "On" "proxyuser" "proxypass"
I could get get the proxy and port to populate, but the user/pass was hit or miss, which was what I was aiming for.
I ended up using the SetWebProxy.sh from the Resource Kit, which accomplished setting the proxy and port, but not the user/pass
but what I was really shooting for was to make it transparent for the end user that they did not need to manually authenticate and clicking Always Allow when prompted for keychain access to the proxy. We ended up rolling with it and it all worked out, just was going for convenience for users.
This is only a thought as I've never played with that flag in networksetup, but what if you set it to "on" instead of "On"? Does that make any difference?
I've seen flags that are case sensitive and others that are not within the same binary before. I know it's a stretch, but worth a try.