Unable to Isolate websites in Edge browser.
Note: This is not an issue or limitation with Web Isolation, but how Edge browser behaves when SmartScreen is enabled and when the client cannot resolve and reach the website.
Windows with Edge Browser and SmartScreen enabled.
Web Isolation servers are on-premise and can reach the Internet.
Users PC can reach Web Isolation servers but cannot resolve and reach Internet websites or can only reach selective websites which are allowed to be resolved and connected to.
Whenever SmartScreen is enabled for Edge browser, SmartScreen tries to check if the website is a phishing/malicious URL and also does a local DNS query. If the DNS server fails to resolve the website, Web Isolation will not be used to isolate those websites.
For more about SmartScreen please ref to: https://support.microsoft.com/en-in/help/17443/microsoft-edge-smartscreen-faq
If the user wants to keep smartscreen ON, Internal DNS server should be able to resolve the websites. The another option user has is turning off SmartScreen for Edge in order to resolve this issue.
It's up to the user to decide which one fits best in their environment.