You are right. If your user has administrative rights, during the installation, the FiddlerSetup executes the following command:
netsh advfirewall firewall add rule name="FiddlerProxy" program="$INSTDIR\Fiddler.exe" action=allow profile=any dir=in edge=deferuser protocol=tcp description="Permit inbound connections to Fiddler"
This allows you to debug traffic from other machines, if you select the 'Allow remote computers to connect' option from the Fiddler options.
However, how the activation process of the Office 365 app works and why it does not work without Fiddler in your case is out of my scope.
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