Unfortunately, your subject line is pretty confusing, so let's walk through your concerns one-by-one.
1> However when I run fiddler, it takes over my proxy settings (as expected) but never releases them.
Fiddler changes your proxy settings to point to itself when it starts capturing. When it shuts down, it returns your proxy settings to what they were before.
If you find that the settings are not properly returned to what they were before, the most likely explanation is that there's some other software on your system with a bug that corrupts the Windows proxy settings. Poorly-written networking or security software is the typical culprit.
2> It adds certificates to my personal certs that are flagged as fiddler
Yes, when HTTPS decryption is enabled, Fiddler generates certificates for interception, as described here: http://www.telerik.com/blogs/faq---certificates-in-fiddler
. You can configure Fiddler to remove these certificates each time it closes (slower performance) by choosing the "Clear server certs on exit" checkbox shown on the configuration screen (Tools > Fiddler Options > HTTPS > Link: Certificates are generated by). Alternatively, you can install the Fiddler CertMaker add-on which does not store created certificates (other than the root) in the Windows Certificate store.
3> it also modifies my proxy settings so even when it is not running, it says that I my system administrator has set my system to not allow me to change
I'm afraid I have no idea what this means; Fiddler has no feature of this nature. How could Fiddler "say" anything when it isn't running? If you see this message in some other software, it's not coming from Fiddler. Again, such a warning could be caused by poorly written networking or security software, or it could be a legitimate message related to an administrator-applied Group Policy.
Do you want to have your say when we set our development plans?
Do you want to know when a feature you care about is added or when a bug fixed?
Telerik Feedback Portal
and vote to affect the priority of the items