Though it was easy to capture the traffic of web service running on local pc in Firefox, it was little tricky in case of IE. I have heard that .Net and IE don't send traffic to localhost through a proxy, so here the proxies such as Burp, Paros fails. So only way is to use Firefox or other browsers which support it or in case of IE, this is workaround:
Go to Windows-> System32-> Drivers-> Hosts and make the following entry:
127.0.0.1 myDomain.com
Now access the site as http://myDomain.com
Now the Burp/ Paros would be able to capture the traffic!
Go to Windows-> System32-> Drivers-> Hosts and make the following entry:
127.0.0.1 myDomain.com
Now access the site as http://myDomain.com
Now the Burp/ Paros would be able to capture the traffic!
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