Document Microsoft Foundry Local setup and usage

Added section for Microsoft Foundry Local with installation and usage instructions.

Author: leestott

docs/auth/byok.md

@@ -10,6 +10,7 @@ BYOK allows you to use the Copilot SDK with your own API keys from model provide
 | Azure OpenAI / Azure AI Foundry | `"azure"` | Azure-hosted models |
 | Anthropic | `"anthropic"` | Claude models |
 | Ollama | `"openai"` | Local models via OpenAI-compatible API |
+| Microsoft Foundry Local | `"openai"` | Run AI models locally on your device via OpenAI-compatible API |
 | Other OpenAI-compatible | `"openai"` | vLLM, LiteLLM, etc. |
 
 ## Quick Start: Azure AI Foundry
@@ -250,6 +251,36 @@ provider: {
 }
 ```
 
+### Microsoft Foundry Local
+
+[Microsoft Foundry Local](https://foundrylocal.ai) lets you run AI models locally on your own device with an OpenAI-compatible API. Install it via the Foundry Local CLI, then point the SDK at your local endpoint:
+
+```typescript
+provider: {
+    type: "openai",
+    baseUrl: "http://localhost:<PORT>/v1",
+    // No apiKey needed for local Foundry Local
+}
+```
+
+> **Note:** Foundry Local starts on a **dynamic port** — the port is not fixed. Use `foundry service status` to confirm the port the service is currently listening on, then use that port in your `baseUrl`.
+
+To get started with Foundry Local:
+
+```bash
+# Install Foundry Local CLI
+winget install Microsoft.FoundryLocal
+
+# List available models
+foundry model list
+
+# Run a model (starts the local server automatically)
+foundry model run phi-4-mini
+
+# Check the port the service is running on
+foundry service status
+```
+
 ### Anthropic
 
 ```typescript
@@ -305,6 +336,7 @@ Some Copilot features may behave differently with BYOK:
 |----------|-------------|
 | Azure AI Foundry | No Entra ID auth; must use API keys |
 | Ollama | No API key; local only; model support varies |
+| [Microsoft Foundry Local](https://foundrylocal.ai) | Local only; model availability depends on device hardware; no API key required |
 | OpenAI | Subject to OpenAI rate limits and quotas |
 
 ## Troubleshooting
@@ -368,6 +400,21 @@ curl http://localhost:11434/v1/models
 ollama serve
 ```
 
+### Connection Refused (Foundry Local)
+
+Foundry Local uses a dynamic port that may change between restarts. Confirm the active port:
+
+```bash
+# Check the service status and port
+foundry service status
+```
+
+Update your `baseUrl` to match the port shown in the output. If the service is not running, start a model to launch it:
+
+```bash
+foundry model run phi-4-mini
+```
+
 ### Authentication Failed
 
 1. Verify your API key is correct and not expired