Review the rules. Assume domain UDP is enabled in the implied rules. What happens when a user from the internal network tries to browse to the internet using HTTP? The user:

Successful connection after authentication would require an explicit authentication action in the matching rule, which is not indicated here.

Being prompted three times before connecting is the behavior of User Authentication, which applies only when the rule has a User Auth action and the session is HTTP-based - not the case described.

Telnetting to port 259 is the mechanism for Client Authentication, a specific authentication method that requires the user to manually authenticate to the firewall daemon before traffic is permitted - not applicable here.

With domain UDP enabled in implied rules, DNS resolution is permitted automatically. If the Rule Base contains a rule that allows HTTP traffic from the internal network to the internet without specifying a User Authentication or Client Authentication action, the firewall passes the traffic silently without prompting the user for credentials.