Dmitry,

The first non-comment line in the file needs to be:

127.0.0.1 localhost

After that you put the URLs to block. If I put www.registrarads.com into the IE address I get the IE internal "Cannot find server" page.

>I did save HOSTS before hitting the URL. And it was such a random url that I doubt that I had it in my cashe. I tried another URl and the same result: I get a dialog box asking for user name and password. I understood from your initial message that this should not happen - that is, no prompt for user name and password should appear. I probably need to look at it again. Which I will do now.