You should have a complete /opt/etc/privoxy dir come with the privoxy ipkg package. I will give you a conf file, but be warned that it's not enough, there's a whole dir with over 40 files. Install the ipkg properly and you will get a proper etc/privoxy config dir.
Code:
forward-socks4a / 192.168.123.254:9050 .
user-manual /opt/share/doc/privoxy/user-manual/
trust-info-url http://www.example.com/why_we_block.html
trust-info-url http://www.example.com/what_we_allow.html
confdir /opt/etc/privoxy
logdir /opt/var/log/privoxy
actionsfile standard.action # Internal purpose, recommended
actionsfile default.action # Main actions file
actionsfile user.action # User customizations
filterfile default.filter
listen-address 192.168.123.254:8118
toggle 1
enable-remote-toggle 0
enable-remote-http-toggle 0
enable-edit-actions 0
enforce-blocks 0
buffer-limit 4096
forwarded-connect-retries 0
accept-intercepted-requests 0
allow-cgi-request-crunching 0
split-large-forms 0
Adjust the IP addresses and ports for your case.