Is there any way I can use an NTLM driven http proxy server with 
squeak?

What do you mean by NTLM driven proxy server? If you are talking 
about using Seaside or some web framework for Squeak to collect the 
User ID / Password (form-based) then authenticate the user to an AD 
controller, then yes, this is possible. If you also mean to build a 
plain jane forward and/or reverse proxy server to access resources 
that are accessible either anonymously and/or using basic auth, then 
yes this seems doable.

If you are asking about using squeak to authenticate the user using a 
strict NT challenge and response protocol and then cache the user's 
authentication token on the Squeak server and impersonate the user to 
backend NTLM-based web servers, then I think you have a lot of work 
ahead of you. I can't even get Apache with mod_proxy to do this.

Regards,
John