Trying to use Fiddler to capture traffic with WSSA enabled, but it is not able to see any traffic.
Fiddler and WSSA are both competing for the role of system proxy and use of the loopback traffic and that is what's causing Fiddler to not function.
Web Security Service
To allow WSSA and Fiddler to work simultaneously, you will need to add the looback address to the bypass list in the WSS portal.
Note: Adding 127.0.0.1 to the bypass list will cause user traffic to be sent through the system 'non-interactive' tunnel, so user-based or group-based rules will not be enforced. Therefore, this should only be a temporary solution.
Note: Adding a new entry to the bypass list will cause all WSSA clients to reconnect to WSS.