Boeing247,

90 degree intercept is not happening!
Too big a turn.
Most intercepts by ATC would be between 45 and 30 degrees, with 30 being a lot nicer.
Even though you put the plane on autopilot you still have to FLY THE PLANE.
You might have to use heading select to get the aircraft to turn toward the LOC if the auto stuff does not do it for you.
In the real plane the little black button (Z) on the yoke is your friend - use it if the plane does not do what you want then when you are under control, hook it up again and see what it wants to do. As an instructor in these planes I would never let a student sit there pushing autopilot buttons without a hand on the yoke and thumb on the disconnect button.
Try it again with a 30 degree intercept and be on speed with flaps 5 degrees.

Lou

http://www.smartcockpit.com/data/pdfs/plane/boeing/b767/diagrams/B767-ILS_Approach_Pattern.pdf