>Hi,
>
>>Can you confirm with NSLOOKUP what your local DNS is returning for the URL you're trying to get to via HOSTS?
>
>'Unknown' (it's a deliberately fictional URL).
>
>But resolved : http://support.microsoft.com/kb/896861/. Snip:
>
>"This issue occurs if you install Microsoft Windows XP Service Pack 2 (SP2) or Microsoft Windows Server 2003 Service Pack 1 (SP1). Windows XP SP2 and Windows Server 2003 SP1 include a loopback check security feature that is designed to help prevent reflection attacks on your computer. Therefore, authentication fails if the FQDN or the custom host header that you use does not match the local computer name"
>
>Didn't bother with the workarounds since there's no real reason that I require the ability.

Hah! Now that was pretty obvious, wasn't it? ( not! )

Thanks for posting your findings.