For the record, this is how I set up apache to be used as a forward-proxy with basic authentication:
Open http.conf
Uncomment the following LoadModule directives to enable proxy funcionality
LoadModule proxy_module modules/mod_proxy.so
LoadModule proxy_http_module modules/mod_proxy_http.so
Add the following directives to the http.conf to enable authentication
ProxyRequests On
ProxyVia On
<Proxy *>
Order deny,allow
Allow from all
AuthType Basic
AuthName "Password Required"
AuthUserFile password.file
AuthGroupFile group.file
Require group usergroup
</Proxy>
Create a password.file using the htpasswd.exe utility. Place it on the Apache Root directory
htpasswd.exe -c password.file username
Create a group.file using a text editor at the same level as the password.file with the following contents
usergroup: username
Then run apachectl restart to pick up the configuration changes.