OK, if you can suft the internet, you are fine, try pinging your gateway, if that works then there is a couple of things that might had gone wrong:

1. there is another HOST file somewhere, check for spyware and delete ALL host files in your computer except the one mentioned earlier... SpySweeper has a host checking funvtion.

2. the DNS server is actually resolving localhost. Change the entry for local host to another IP address in your network that would reply, such as your gateway....