Using oS["X-AutoAuth"] = "(default)" will automatically respond to any Digest/NTLM/Negotiate authentication demand (e.g. both server auth and proxy auth) with the current Windows user's logon credentials. This will obviously not work if the server requires credentials other than those (e.g. the user logs into the proxy with a different account) or if the server demands HTTP BASIC authentication.
Having said that, why would you want to do this at all? It would generally be better to NOT try to have FiddlerCore perform authentication and instead let the client application respond to the 401 or 407 as it would normally.