Core issue
Normally, proxy Address Resolution Protocol (ARP) allows the VPN concentrator to respond to an ARP request for any network for which the concentrator has a route. ARP requests are normally broadcast by a device that wants to send a packet to its local LAN. The request asks all other devices on the network for the destination IP address and the physical address of its port.
Some old devices were designed for networking only on their local LAN. These devices send ARP packets for all traffic they want to send, including packets destined for other networks. If proxy ARP is enabled, the VPN concentrator can intercept the ARP request and answer with its own physical address. The VPN concentrator can then receive the packet and forward the packet to its real destination.
Resolution
On Cisco VPN 3000 series concentrators, there is no option to disable proxy ARP in the interface configuration. Therefore, it cannot be removed from the VPN concentrator configuration.
