I set up the proxy server and discovered that it won't do transparent proxy even though I selected that option. It does filter and behave properly if I treat it as a manual proxy. Any ideas on that? I updated to 16.1.17 but still no go.
Did you forget to add a firewall rule?
If this is your case, show the help messages - one includes a template link.
The relevant documentation is here: https://docs.opnsense.org/manual/how-tos/proxytransparent.html