From the roots fag- meaning gay and agnostic meaning indifferent. A person who is fagnostic isn't really gay, but isn't really opposed to the idea. Most fagnostics are closet cases or 'three beer queers.' Also, refer to 'hipster.'
Co-worker #1 "Look there's Jim, I heard that he's gay, someone saw Todd blowing him at the Christmas party."
Co-worker #2 "No, Jim's just fagnostic, he'll take oral from anyone when he's drunk, he's got a girlfriend in Canada."