Eric,
Thank you for the reply.
I have tried many different methods including using proxycap, but for some reason, when proxycap is running, I get "network disconnected" errors from all apps in bluestacks. I have seen other posts in here where people have been successful, but am unsure as to why I am getting this error. I am unable to load web pages in browsers in bluestacks etc. I think that the newest version of bluestacks put forth even more efforts to ignore proxy settings. With that said, I think that the best work around is to use a different app player than bluestacks.
I will poke around and try to find an emulator that works better with fiddler. I will post back soon.