40d flash operates in AUTO mode

I just bought this camera and was taking pics on Sat. and in full AUTO mode under overcast skies, the flash would frequently fire. I looked at the pics and they looked underexposed. This was just of a group of people standing in line on the street with sky filling 1/4th of scene.

Same deal with other distance pics with the sky filling part of the scene but half of the scene was ground, people, etc.

Wouldn't AUTO mode select the proper aperture and speed to preclude use of flash???

No. I tries to make the best shot taking into account all factors. Effectively if the shot comes of "bad", you either need to recompose to the limited ability of auto or figure out how to use the other modes.

Post samples for further discussion.

P mode will automatically set the shutter speed and aperture. Also allows you to turn off the flash.

regarding full auto, straight from the 40d manual..

Although it is daylight, the flash popped up
For a backlit subject, the flash may pop up to help reduce harsh shadows on the subject.

In low light, the built-in flash fired a series of flashes
To assist the auto focusing, pressing the shutter button halfway may trigger the built in flash to fire a series of flashes. This is called AF-assist beam. it is effective up to approx. 4 meters/13.1 feet away

although the flash was used, the picture came out dark
The subject was too far away. The subject should be within 5 meters/16.4 feet from the camera

Learn the creative modes, AV to start or TV...best way to learn. You will be disappointed with auto most of the time.