>When you're connected, you have access to your ISP's DNS servers. If for some reason they are resolving the name "localhost" to something other than 127.0.0.1 that could be the problem. Try running in a command window:
nslookup localhost
You should get either "can't find" or possibly 127.0.0.1. If it's something else that's likely where the problem lies.
>
>You might also want to check your local TCP/IP WINS setting, specifically "Enable LMHOSTS lookup" which should probably be enabled for your HOSTS file to be active.
nslookup is returning a "Can't find" for localhost.
As far as the HOSTS file goes, I believe that should be in effect automatically. Although I haven't played around with it much under XP, I have under Server 2003. I didn't install WINS or any DNS service there because I wasn't running as a domain name server. Anything I put in the HOSTS file worked great. (I used it for demonstrating setting up multiple domain names under a single IP address, and used entries in HOSTS to get the domain names directed to my machine.)
I don't even see where I have the option to install WINS under XP. It's not listed under Windows Components from Add/Remove Programs. That's where it is for the server OSs.